Bus Services Bill [Lords]

Graham Stringer Excerpts

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

[Chris Grayling]

I do not believe it was a major mistake, because we have seen substantial investment from the private sector that would not otherwise have happened. The interesting test for the right hon. Gentleman if he is successful in his mayoral bid in Greater Manchester—I say “if” because he has issues to deal with, such as the reputation of his party leader and the strength of other candidates—is whether he manages to use those powers to deliver the better bus services for which he argues. I will watch with interest if he is successful.

[Graham Stringer (Blackley and Broughton) (Lab)]

I welcome the Bill, but the Secretary of State is on a very thin point when he justifies what has happened over the past 31 years with investment in new buses. Does he realise that that investment has come from the extreme exploitation of bus passengers, particularly in metropolitan areas, where bus companies exploiting monopoly positions have been able to get a rate of return on capital that is much higher than they would get from real competition, and much higher than companies get in the franchised London area?

[Chris Grayling]

In a sense, the hon. Gentleman argues against himself. He complains about competition in those areas, but at the same time says that bus companies have been able to exploit monopoly positions. That is inconsistent. We will see whether the next Mayor of Manchester manages to demonstrate that he or she can do a better job than the private sector. That is the test. Let us see whether they can deliver that. If the right hon. Member for Leigh (Andy Burnham) is successful in his campaign, we will watch with interest.

This is not just about mayoral authorities but about authorities elsewhere. I want to be clear that, while we are open to plans from other authorities to take franchising powers, we will give them only if they can demonstrate that they can do a better job than the current one. A compelling case needs to be made before any other authority receives consent. The key point is that we have the point of accountability with the Mayor, who will have a legal duty to demonstrate an enhanced service, or a point of accountability in the Government, who likewise will judge whether a proposal will deliver that enhanced service.

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[Graham Stringer (Blackley and Broughton) (Lab)]

It is worth going through a little history to put the Bill into perspective. Although I support this Bill, there is one real sense in which I, as Labour MP, think it is not necessary. The fact is that since the Transport Act 1985 was implemented in 1986, virtually every Labour Member has seen it as a catastrophic failure for people who use buses. It saddens me that a Labour Government did not bring forward a better Act than the Bill before us now. However, the Government have brought this Bill before us, and it is worth supporting.

Given what the Secretary of State said about reversing the Lords amendments, it is worth remembering why we have this Bill at all. It came about because the then Chancellor, the right hon. Member for Tatton (Mr Osborne), had discussions with the chief executive of Manchester City Council, Sir Howard Bernstein, who retires this month and to whom we should all pay tribute for progressing this item, which will undoubtedly improve buses. The then Chancellor recognised what many of us had been saying for some time—that this country would be much better off economically if we made our major cities work, rather than depriving them of resources and of allowing them to run their transport system in favour of the economy and people who live in the area. Sir Howard Bernstein and Sir Richard Leese persuaded the then Chancellor, and we now have this Bill before us.

It was always an ideological position of the Conservative party, as we heard from the right hon. Member for Chipping Norton, that it wanted a complete free-market approach to buses. However, the Government conceded that they would allow reregulation if combined local authorities agreed to have an elected mayor. That negotiation was entered into and agreed. One has to bear that in mind when the Government say that they will reverse the Lords amendments. I agree with that in principle, but I would not like to lose the Bill, given that a negotiation happened and an agreement was put in place between local authorities and the Government that will improve life for many people I represent and for many in mayoral combined authority areas.

I will go through two major issues. First, the right hon. Member for Chipping Norton gave the argument for the exceptionalism of London or, to put it another way, “It’s okay for us in London. You lot can get on with it.” [Hon. Members: “ Chipping Barnet.”] I am sorry; if the right hon. Member for Chipping Barnet (Mrs Villiers) were in her place, I would apologise to her. She put forward three arguments as to why London should have something that the rest of us cannot. One was that it would bring uncertainty to the bus companies. Well, there would probably be a bit of uncertainty for the bus companies, as they will have to compete in a different way to run services, but my prime interest and concern is for the passengers who, for the past 31 years under the deregulation Act, have only had six weeks’ notice—in practice, sometimes less—of bus services being withdrawn. Part of the Bill takes some of that uncertainty away from passengers, so that argument does not stand up, particularly if our priority is the passengers.

To be completely straightforward, I did not understand the right hon. Lady’s second point, which was about the renationalisation of the buses. The Bill is not about renationalising the buses. It is primarily about reregulation in metropolitan areas. Although I accept the deal, and allowing local authorities to set up municipal bus companies was not part of that deal, I do not think it would do any harm for local authorities that saw the need for it to have the right to set up municipal bus companies, particularly if the private sector moves out, as it has threatened to do on a number of occasions if the Bill goes through.

The right hon. Lady’s third point was about the finance that goes into London from the congestion charge. The really important thing is that there was a period between 1986 and 2000, when Ken Livingstone won the London mayoralty, when there was effectively no subsidy. There was certainly no congestion charge for there to have been subsidy. There was no loss of bus passengers in Greater London over that period, whereas the number of bus passengers plummeted in the west midlands, Merseyside, Tyne and Wear, and Bristol. The figures fell by two thirds in South Yorkshire and by half in Manchester, but without the subsidy from the congestion charge, the passenger figures in London remained the same. The arguments of the right hon. Member for Chipping Barnet against this Bill do not stack up.

It is worth taking a deeper look at how the deregulation has worked, why it does not work and the flaw in the arguments in support of it, for those who still support deregulation. When the legislation was introduced—incidentally, I have sadly been around long enough to have campaigned against the introduction of the 1985 Act—the argument was that competition would improve the bus services because bus services were run by municipal authorities that had monopolies and were not providing the best possible service. I do not believe, as the Opposition have been accused of believing, that that was a completely utopian, golden age. It was not; there were flaws. Many bus routes in South Yorkshire, which my hon. Friend the Member for Sheffield South East (Mr Betts) talked about, and in Greater Manchester and Merseyside, were still running on the schedules and timetables of the old tram system. They did not respond quickly enough to the changes in population after slum clearance. There were faults, but there were night services, people could get across the conurbations to see their parents on Saturdays and Sundays because there were bus services, and people could get to work early in the morning or home late at night after shifts. All that has disappeared. So, no, it was not a golden age, but it was a much better service than is being provided by the private sector.

It is important to understand why the competition that was supposed to deliver has not worked, and it has not worked for two reasons. Where there was severe competition, as there was in south Manchester, Preston, Edinburgh and other places, bus companies went head to head and really had a go at trying to run the other bus company off the road. Those places got not a better service, but terrible congestion. City centres were blocked up. The system did not work where there was severe competition, but that was very rare. The Competition Commission did a study in 2011, finding that there was virtually no on-the-road competition. Supplementary evidence shows that there was very little competition because companies in the London system—as much as the bus companies’ accounts can be understood—were getting a much lower rate of return on their capital than companies elsewhere, although it still enabled them to invest in new buses.

[John Pugh]

Does the hon. Gentleman agree that there is also a myth about deregulation meaning the introduction of the private sector? There were many splendid private sector operators in Liverpool prior to deregulation, such as Crosville and Ribble, which existed alongside the municipal sector.

[Graham Stringer]

The hon. Gentleman is quite right about Merseyside. In Manchester, Mayne Coaches ran a service in the private sector, but it was regulated; it could not just—as happens under the deregulated system—decide to run a bus service one day and take it off six weeks later, or vice versa. So the issue is not privatisation but the lack of regulation.

The point I was getting to is that there is supplementary evidence that competition did not work. The rate of return in London was much lower, and FirstGroup moved out of the London market because it could make a much higher return in South Yorkshire and Greater Manchester.

[Rob Marris]

My hon. Friend may be aware that, of the major metropolitan urban areas outside London, the west midlands had the least competition, with over 85% of services run by Travel West Midlands and then by National Express. The ridership dropped less in the urban west midlands than in any other metropolitan areas, but, literally, at a price, with some of the highest fares and some of the highest returns on capital. So the competition was not there, and we had the high prices, but at least we had the continued ridership.

[Graham Stringer]

Indeed. It was often the change that led to the loss of ridership. When companies such as FirstGroup and Stagecoach operated their services, they were certainly, whether by tacit agreement or not—I doubt whether there was a written agreement—operating semi-monopolies, which enabled them to charge much higher fares. It is not only that the ridership has gone down, but fares have gone up by about 43%.

The question I was coming to in terms of supplementary evidence is this: in terms of the way the legislation has worked so far, does anybody think that we, as the taxpayer, have had our return from Brian Souter and his sister, who have become billionaires out of this—I do not mind people being creative, being entrepreneurs and making money—pocketing money by gaming the system, running semi-monopolies and putting buses out, when every single bus that goes out of the depot has, on average, a 50% public subsidy? Certainly, Brian Souter and his sister have made money out of gaming the way the subsidy works. The system has not worked; it has not been competitive. Moving to a system where there is competition, not on the road, but by tender by private bus companies, will be better for the travelling public. I agree with competition by and large, because monopolies tend towards inefficiency, but the competition is better off the road, not on it.

I have one question about reliability, which my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) asked about. We are often told that congestion makes the buses unreliable, and it does. However, when the Transport Committee took evidence, we found that, in the majority of cases where buses did not turn up, that was not because of congestion, but because of mechanical failures in the buses, which had not been properly maintained, or because drivers had not turned up. That is an important point to bear in mind.

Finally, I would like to ask the Minister, who is in his place, the same question my hon. Friend asked: is saying that mayoral combined authorities have to have a compelling case before they re-regulate the buses trying to bring back the very high hurdle—the very high benchmark—that was in the Transport Act 2000, which effectively prevented those authorities that wanted to re-regulate the buses from doing so? Is it there to undermine what is essentially a good Bill? I hope the Minister will answer that in summing up.

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[Chris Green]

It is also incumbent on the new mayors and the new systems that we have in place locally not just to allow that to happen but to encourage it to happen.

The Conservative party has often led the way on public transport. In Greater Manchester, we need only look back to our reintroduction of the tram network in the early ’90s after an absence of decades, and only this week we have seen the completion of the latest expansion of Greater Manchester’s Metrolink. We need a better integrated and thought through service on buses, as we have on our trams. These improvements to Greater Manchester’s public transport network have not always, unfortunately, been matched with great ideas from Labour, which wanted to impose a congestion charge on people travelling in Greater Manchester—a burden that would have disproportionately affected people in the Bolton, Wigan, Bury, Oldham, Rochdale, Salford, Stockport Tameside and Trafford boroughs.

[Graham Stringer]

And Manchester.

[Chris Green]

Absolutely—and parts of Manchester outside the two rings. I am pleased to say that Labour bowed to pressure to have a referendum on the damaging congestion charge proposals, and the people of Greater Manchester in all 10 boroughs rejected that idea.

Currently across Greater Manchester, bus services are not fulfilling their potential in a desired integrated transport system. This Bill provides the tools to achieve that, and we must ensure that it does so. We have to think about buses large and small—not just the larger and double-decker buses but the increasingly used smaller buses—in getting this increased connectivity. Buses must be linked together with all the other forms of transport—with trams and rail, and with car drivers by having more park-and-rides. I will do all I can as a Member of Parliament to ensure that the new Mayor and administration take advantage of every opportunity given by this Government.

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[Andy Burnham (Leigh) (Lab)]

I have heard lots of mention made of mayoral elections in this debate, so I should probably declare my interest in saying that I am a candidate in one of those races and will indeed seek to use the powers in this Bill should they become available to me. The comments I wish to make today are born out of 16 years as the Member of Parliament for Leigh and the issues I have dealt with relating to bus services in my constituency, which frankly, in my view, have never been good enough in that time.

To put the debate into its proper context, I want, like my hon. Friend the Member for Blackley and Broughton (Graham Stringer), to go back to the 1985 legislation. Let me read out the words of the then Transport Secretary, Nicholas Ridley, when he introduced the Second Reading of the Bill that became the Transport Act 1985:

“The Bill is about competition...We want to see competition providing an incentive to be efficient and to offer passengers a better quality of service. The customers…want greater efficiency, lower fares, smaller buses going into residential estates, greater comfort or a more polite and helpful driver. Competition is the key to these improvements. It is the key to increasing patronage.”—[Official Report, 12 February 1985; Vol. 73, c. 192.]

Having listened to the current Transport Secretary today, I can only say that he put the bravest face that he could on the situation and glossed over some of the real problems that we have seen in bus services ever since that flawed legislation was introduced. He tried to point to all the investment that the private sector had made and said that there had been service improvements, but I am afraid that that is not how the travelling public see it.

It is certainly not how I saw it when I was growing up. I was of an age where those changes directly affected me. I was 16 when the legislation came into being, and then saw it affect me in my teenage years and as I moved towards work. The Secretary of State is fond of reminding people, as he did today, that I was born down the M62 in Liverpool, but he needs to know that when I was one, my dad got a job in Manchester and we moved halfway between, so I was a regular user of the orange and white buses from Leigh bus station—the 26 and the 39—into Manchester; it used to cost us 10p. The minute the 1985 legislation was put in place, the price shot up, the services all changed, and nobody knew where they were. I could not get to work at my first job on the Middleton Guardian using the bus, because it was an unpaid job as a trainee reporter and I could not afford it. Those experiences live with people.

Anybody who has used the buses in Greater Manchester over the past 32 years since the changes came in would say the same. As my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) said, bus usage has gone down from 355 million journeys in 1986 to 210 million journeys now. The picture has been the same in South Yorkshire and other metropolitan areas that have been mentioned—a huge decline that is very much linked to the cost and quality of the services.

[Graham Stringer]

I am listening with interest to my right hon. Friend as he refers back to Nick Ridley’s speech. Was he aware that when asked the then Secretary of State could give only one example in the whole world of a deregulated system such as the one he was going to impose on everybody in the rest of the country apart from London, and that was Kuala Lumpur?

[Andy Burnham]

It is interesting, is it not? I read the Second Reading debate and that point was put to the then Secretary of State many times, and, Kuala Lumpur notwithstanding, there was no other evidence to support the major changes. I seem to remember that there are plenty of rickshaws in Kuala Lumpur, but I do not know whether he was including that in his argument.

That Secretary of State and his Government inflicted an ideological experiment on the country without evidence to support it. The facts show that it has been an unmitigated disaster for the travelling public. Today, Members on both sides of the House should at least agree to call time on it and give the various parts of the country the powers they need to correct it.

I want to say something about coverage and quality of services. I know, as my hon. Friend the Member for Manchester, Withington (Jeff Smith) said in his excellent speech—I wish I could have been in that café with him while Eric Cantona played chess; it was a great image—that in parts of his constituency, particularly as it goes into the centre of town, buses are nose to tail. Particularly as they get towards Oxford Road in Manchester, people can see that the bus congestion is just ridiculous. I was with the vice-chancellor of Manchester University last week and she told me that the record number of buses that students had counted along Oxford Road was 34 continuously nose to tail. Of course, that has a terrible effect on traffic congestion in the city centre and it simply does not work.

We have saturation on the lucrative routes, as the bus companies see them, but, as we have heard today, they abandon more isolated areas that do not make a profit for them. The Higherfold estate in my constituency, which is in an isolated area, has constantly had problems with services being unilaterally withdrawn. Then there is an attempt to hold the passenger transport authority to account by saying, “Give us a subsidy or there is no service at all.” That leads to large subsidies for the bus companies that operate in such a way.

A year ago, a Mrs Healy wrote to me to say that the withdrawal of the 12 and 15 services from Leigh meant that her son could no longer get to work in Little Hulton and he had lost his job. No notice was given of the withdrawal of that service. This has a real impact on people’s lives and, as my hon. Friend the Member for Wythenshawe and Sale East said, because many people in this Chamber do not use buses they might not understand how detrimental poor bus services can be to some people.

My hon. Friend the Member for Manchester, Withington mentioned the Arrowfield estate. I recently went there to meet the Arrowfield and Hough End residents group, who told me about the withdrawal of the 84 service, which he mentioned and which, I think, served Withington hospital. The group said that that service had been withdrawn without any formal consultation with the community and the new service that was meant to replace it stopped at 5.30 in the evening, meaning that people could not get home from work. It is not acceptable for the public to be treated in this way.

Then, of course, there is the cost. In London between 1995 and 2016, fares rose in real terms by 36%, but in metropolitan areas, particularly Greater Manchester, fares rose by 60%. As we have heard today, the fare for a single journey can often cost more than £3. Because of the free-for-all, because operators are all running different ticketing systems and because of the chaos, we cannot have an integrated Oyster-style system, so, again, the public lose out.

During a consultation with young people in Bury a few months ago, I asked about the issues facing them, and the cost of transport came up again and again. I asked them whether they travelled on buses and whether they could afford it—this goes back to a point made by my hon. Friend the Member for Wythenshawe and Sale East—and the answer was that it was cheaper to get an Uber. If there are four of them, they can get an Uber together and it is cheaper than the bus.

Is it any wonder that the roads of Greater Manchester are becoming more and more congested as every year goes by? As the quality and the coverage of our bus service has gone down and the cost has gone up during the past 30 years, congestion has got worse and worse. That is affecting the air quality in Greater Manchester, and it means that Greater Manchester is in breach of the standards—the legal limits—for nitrogen dioxide. This simply cannot carry on, and I welcome the focus in the Bill on air quality.

I hope that the Government will go further and give Greater Manchester the powers to introduce a clean air zone. I ask the Minister: what reason can there be for the Government to exclude Greater Manchester from the list of places that they have allowed to introduce clean air zones, other than cost? Cost is not a good enough reason. It is not good enough that children are breathing in polluted air on the way to school. We look forward to his and the Government’s help in solving that problem.

If all of this were not bad enough in the experience of the travelling public, we are paying through the nose for it as well. A £100 million subsidy has been given to the bus companies annually, while at the same time they have been paying out large dividends to their shareholders. This system really does not work for the public in any meaningful way. As I say, it is time to call time on what is a failed ideological experiment.

I give credit to Sir Howard Bernstein, who has been mentioned, and Sir Richard Leese and Lord Peter Smith, as well as other leaders of Greater Manchester, who in my view were right to insist that the Bill should be part of the devolution deal that was done with Greater Manchester. I pay tribute to the former Chancellor, the right hon. Member for Tatton (Mr Osborne), for agreeing to that request, and indeed to the current Minister and the Secretary of State for sticking by the deal and making sure that the Bill was put before the House.

However, I want to press the Minister and the Government on a number of concerns. An issue that several colleagues have raised today is the decision to reintroduce the clause that will restrict municipal ownership of bus companies. As my hon. Friend the Member for Nottingham South (Lilian Greenwood) said, why restrict people, because we could at least have that as an option? From my point of view, as someone who might consider using the franchising powers, to have the fall-back option of a publicly owned company being able to come in and provide the service if there were no bidders on the terms sought would provide leverage, would it not? It would do so if they knew they could run a service because they had such an option up their sleeve. I say to the Minister that nobody wants anything to happen to the Bill that might disrupt its passage, but the Government should surely give people such flexibility so that they can make full use of the powers proposed in it.

Another issue I want to mention is the one raised by my hon. Friend the Member for Blackley and Broughton. He talked about the regulations that have been published very recently—within the past couple of days—relating to the Bill. They state that the powers in the Bill can be given to a metropolitan mayoral area only if a “compelling case” is presented—not just a viable case, but a compelling one. In his winding-up speech, the Minister needs to spell out precisely what that means. Is he erecting a high hurdle to prevent metropolitan mayors from using the powers in the Bill?

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[Andy Burnham]

I agree, because there are benefits from linking HS2 and HS3. I would like a parkway station in my constituency—Leigh would be the place where the preferred HS3 route crosses HS2. The benefits in terms of taking traffic off the M6 and the East Lancs are enormous. That is why they should be planned as a single scheme. I drive a lot around Greater Manchester and the north of England. Congestion is getting worse. Anybody travelling on the M62 today between Manchester and west Yorkshire, or between Manchester and Liverpool, or over to Sheffield, which is even worse, will know that the congestion is not sustainable. We are trying to attract people to invest in the northern powerhouse, but congestion could be the factor that deters them. The Government need to give us certainty about northern powerhouse rail so that we can begin to reassure people that the north will move, and that it will be the powerhouse that the Government have spoken about.

[Graham Stringer]

My right hon. Friend makes profound good sense about linking HS2 and HS3. Does he agree that the critical decision in getting both HS2 phase 2 and HS3 is the schedule in Parliament for the hybrid Bill? If the hybrid Bill for Crossrail 2 gets in front of that, we will not finish HS2 in most of our political lifetimes, and we will certainly will not integrate it with HS3.

[Andy Burnham]

I could not agree more with my hon. Friend. The Government need to be honest about their intentions. It would be a gross unfairness if they put Crossrail 2 ahead of HS3 or northern powerhouse rail, or even HS2, in the legislative or Treasury queue. I cannot see how that could possibly be allowed to happen. If they commit now to HS3, the investment potential that would be unlocked immediately would be enormous. I hope the Government listen carefully to that argument—I see the Minister nod. I am speaking not only for businesses in Greater Manchester, but for businesses across the north of England, which see the poor quality of transport as the biggest threat to our future economic prosperity.

If elected in two months’ time, I intend to use the powers provided by the Bill to bring fares down in Greater Manchester, particularly for young people, as I have said. I intend to use the powers in the Bill to improve the quality and coverage of services, and to ensure that those isolated areas and more deprived parts of Greater Manchester have a reliable and regular service. I want to improve the travelling environment for all the public, but particularly for disabled people and visually impaired people. I want to do all of those things.

For the last 30 years, the public in Greater Manchester have had to put up with buses run in the private interest rather than the public interest. It is time to take our buses back and put people before profits.

Bus Services Bill [ Lords ] (First sitting)

Graham Stringer Excerpts

Committee Debate: 1st sitting : House of Commons
Tuesday 14th March 2017 Public Bill Committees

[Andrew Jones]

My hon. Friend makes an interesting point. I think that councils, rather than arguing with the police about who does nothing, have significant powers, and we should encourage them to take action. I hope that we can move to much greater civil enforcement, and to people leading their councils with a view to shaping their local areas and making them better environments, in all respects, including traffic management. As for whether the Government trust councils—a point raised by the hon. Member for Cambridge—the Bill is an enabling one that gives councils powers. Clearly his underlying point is not correct.

The Government are unconvinced that, without further controls, the proposals would be anything other than the potential for revenue-raising by councils, rather than traffic management. That view is reinforced when I receive letters such as one that I had stating, “This is an opportunity for us to get some cash in.” However, I am not against the principle and will continue to talk with the Local Government Association. I discussed it only last Thursday with the LGA—Councillor Martin Tett, the leader of Buckinghamshire County Council, is leading on it—so there are live conversations.

I am happy to give the Committee my commitment that we shall continue with those discussions, but I want to make sure that we see the issue from the point of view of traffic management. If the LGA will do further work on that we can continue to talk. I do not think that the Bill is the right place to tackle moving traffic offences.

[Graham Stringer (Blackley and Broughton) (Lab)]

I understand what the Minister is saying, but the provision is not about enabling councils to carry out a function; it is about restricting current and future ministerial teams. Why does he want to restrict the powers of his Government and following Governments, if they think fit, to confer that power on local authorities?

[Andrew Jones]

I am happy to consider the commencement of these powers, but we have to go through a number of safeguards yet. I do not think that we are in a position to go any further. I am quite happy to keep this dialogue going, but the case has not been made in a way that has convinced me or other departmental colleagues. Indeed, I think that there are reservations across the House more broadly.

This is not about restricting powers; it is about granting powers to councils to enforce moving traffic offences. I know that they want them. These powers have been on the statute book for 13 years and not commenced. Our predecessors probably had some of the same reservations that I have had. I do not think that we can go any further than my commitment to keep talking and not to be against this in principle.

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[Graham Stringer]

It is a pleasure to serve under your chairmanship for the first time, Mr Nuttall. I rise not to make a long speech, but to save you from telling me that an intervention on the Minister is too long—I suspect that such an intervention would be. I want to use these amendments to ask him on what principle he has decided what should be done at the centre—what should be the Secretary of State’s or Government’s decision—and what should be devolved.

We are on our third set of amendments. The Minister has argued that the Opposition amendments are otiose and too prescriptive and, in effect, that things would be better left to normal procedures. He said that traffic management would be better dealt with by current policies and that bus emissions schemes would be better left to local schemes. A number of amendments have been tabled—some by him—that take powers away from local authorities and give them to the centre, but he has also argued that some things should be left to local authorities.

This is a good Bill, which I want to support, even if the Government remove some improvements that have been inserted by the other place, as I am sure that they will. It will still remain a good Bill that I wish to support, but will the Minister explain what principles he is using to decide what should remain within his ambit and what should be devolved? At the moment, what has been devolved down and what has been left at the centre is very confusing, if not to say arbitrary.

[Andrew Jones]

There are a few questions to deal with. Let me start with the underlying principles. I agree that devolution has not been tidy over the past few years, but it has generally progressed from the ground up. I am a great supporter of devolution; we should trust people to make local decisions wherever possible. The hon. Member for Blackley and Broughton suggested that the principle was a little arbitrary, but actually, it comes down to whether there is governance and some kind of control. If we can ensure that we have governance and control, I am happy to see devolution progress. A further point could be accountability, which we might come on to during our debate on franchising.

I am all in favour of consultation with employee representatives when there are material changes to people’s working conditions. A franchising scheme would mean that, which is why we put employee representatives in that proposed new section in the Bill. That is unlikely to be the case for the simple, more structured partnership arrangements, which are about local authorities and bus companies coming together to agree and put forward a set of consumer offers.

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[Andrew Jones]

The clause automatically turns all existing quality partnership schemes made by English authorities into advanced quality partnership schemes. Such schemes may then take advantage of the new provisions and flexibilities of the advanced quality partnership schemes, but will not be obliged to do so.

[Graham Stringer]

Will the Minister tell the Committee how many quality partnerships the clause affects?

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[Bridget Phillipson]

Yes, the north-east has a combined authority. It has gone through the process of further devolution. The sticking point was the Mayor. As I understand it from the Government’s guidance, the difference with Cornwall is that bus franchising was agreed to as part of that devolution deal. Unfortunately, that was not on the table for the north-east. I wish Cornwall well and am glad that it will have those powers. I ask only for a bit of parity, so that we in the north-east get the powers that Cornwall will enjoy. That is symptomatic of the Government’s patchwork approach to devolution, which is borne out not by different local circumstances, but often simply by reaching convenient deals depending on the politics of the situation, rather than ensuring that the best service is delivered for all people.

I ask the Minister to talk a bit more about the difference in approach, because I do not fully grasp why the north-east should not have those powers. Though I take on board his point that unnecessary hurdles should not be put in the way, I am concerned that, to start the process, we will require that approach from the authority. If that case is put forward, I hope that it will not be something that the Department and Ministers seek to frustrate, because the issue is important for the people I represent.

This is a welcome step. Bus services are incredibly important for our country. We mention them too little, although I have tried to play my part in the past few years in talking about them at every given opportunity. The people I represent have only buses to rely upon; they have no access to rail or light rail. Getting this right, and having a system that is fair and works for everybody, is absolutely vital. I hope that Ministers are sincere in their commitment to ensure that areas that seek out these franchising powers will be able to do so, that their case is considered carefully and seriously and that we do not seek to frustrate a process that would lead to real benefits for areas such as the north-east—and not simply in terms of individual routes or services. If the Government are genuine in their commitment to create the so-called northern powerhouse and to see areas such as the north-east thrive and reach our economic potential, we need these powers to deliver real change. We need to link buses to other forms of transport so that we can have tickets and fares that work across all operators, which we do not have at the moment. We need routes where local people can have a say.

The Minister talked about investment in lower-emissions vehicles and has talked previously about investing in smart ticketing. Again, I welcome those steps; but were it not for significant taxpayer investment, that would not have happened in areas such as the north-east. Some of the smart-ticketing schemes that he has come to see in Tyne and Wear came about through taxpayer investment. I welcome that, but bus operators will rarely do these things out of the goodness of their hearts. Where we have significant investment from the taxpayer, it is right that we ensure there is value for money and accountability. I hope that I can work with the Minister and others in the region to get the best possible deal for the north-east, that he looks carefully at what the transport authority may wish to put forward in the months ahead and that we can reach a solution where local people get the service they need and our economy is supported to grow.

[Graham Stringer]

I agree completely with my two hon. Friends. I will try not to repeat the excellent points they have made. I have a nuanced difference with my hon. Friend the Member for Houghton and Sunderland South when she says that the objectives of the Transport Act 1985, which deregulated buses, were the same as the objectives under discussion today. I have been around long enough to have talked to the people who advised the Government and drafted the Bill that eventually led to deregulation, and there is no doubt that they were ideologically driven. They had no idea what the outcome would be when they proposed the deregulation process. They had a belief, which has turned out not to have come to fruition, that if we had competition on the road, that would lead to a better outcome.

The evidence that I, as a member of the Transport Committee, have seen and individual right hon. and hon. Members will have seen—this is worth bearing in mind during the whole debate—is that over the 31 years that it has been there, the deregulated bus system has been a disaster for many bus users. It will be possible to find small instances up and down the country of bus services having improved, but in the overall scenario there has been a dramatic fall.

It is worth considering how we got to the current hotch-potch of schemes. The Government, in the form of the right hon. Member for Tatton (Mr Osborne), who was then Chancellor of the Exchequer, wanted elected Mayors as part of the drive to get the economic potential out of our major urban regions, which have been neglected since even before bus deregulation took place. By and large, most councillors whom I know do not like the idea of elected Mayors. It is not a fashionable thing to say at the moment, but I agree with the right hon. Member for Tatton that elected Mayors are an improvement in the democratic process, because they provide a focus for accountability. However, should that really be the only criterion that we use to determine whether locally elected people can have the powers to improve their bus services? I think that it is a very odd criterion to use. The six areas that have got the powers have done that deal—they have negotiated with the Government—and we have ended up in the situation we have. In supporting the Bill, I respect that deal, but it does allow us, during this debate, to reflect on what we are losing or not gaining during the process.

We are losing the opportunity genuinely to devolve powers and improve bus services. If only the Minister, who is a completely reasonable man, had been there 31 years ago, we might not have ended up in this situation, in which he has to defend centralism in the name of devolving to authorities.

I listened carefully to the five points that the Minister made which local authorities that want the powers will have to observe. I ask him whether any council or councillors who wanted to re-regulate buses via a franchising system would not have to follow those rules anyway. Would they not have to show that they had the necessary resources and that there was clear accountability? Would they not have to consult? Would they not have to know what area they were dealing with? Would they not have to have an effective decision-making process and to show that the plans were sustainable? If they did not do that, they could be challenged in the courts.

The reality is that it is not just councillors who do not like the idea of elected Mayors. The bus industry does not like the idea of franchising. It is not that we are losing competition—the fact is that the large companies are operating without competition in many areas. The measure introduces competition off-road, probably more efficiently and effectively, and the bus companies do not like it.

If an authority that has been granted the powers to bring in a regulated franchise system does not follow the rules, the bus companies would be straight in front of the courts claiming that councillors had not carried out their proper responsibilities or their fiduciary duties and there would be a judicial review. I have talked to bus companies, which have been looking at the Human Rights Act 1998 and all sorts of ways to try to stop this process. In a sense, the Minister is making bricks without straw.

I do not think that the reasons that have been given are good enough to carry on centralising. Another belief underlying the Bill is that somehow elected politicians and officials at a central level are somehow more competent and effective than elected councillors and officials at local level. Can the Minister give evidence of that?

If we look at the huge mistakes that central Government have made—I could just go through different computer schemes without looking at other areas—it is extraordinarily difficult to make the case that centralism works better than localism. This is not a party political point; it is a point about decentralisation. I have been around local government and central Government long enough to know that there are enormous differences in quality at both levels. Some councillors, to put it politely—I could use offensive words—are not as effective or as good as they could be. I have also met Ministers and civil servants at a national level of whom the same could be said. In principle, it is better for people closer to the ground to be able to make those decisions. We are where we are in the negotiations, but if the Minister is serious about devolution, that is where we should end up.

If this is really a Bill about devolving power, will we end up with more civil servants working on these programmes? There are pages and pages of guidance. If we ask for all sorts of consultations that would happen at a local level anyway, are we not just switching resources in a wasteful way to central government? I know why we are where we are on this. There was a negotiation to get what local authorities in certain areas knew they needed—better bus services—and the objective of the then Chancellor of the Exchequer was, as he saw it, to improve the structure of local government to make it more economically dynamic.

The Bill allows us to shine a light on what has happened in the bus industry, which has lost two-thirds of passengers in urban areas. By allowing decisions to be made locally, we could achieve a more immediate improvement in bus services in all parts of the country. If the electorate’s representatives want it, presumably it would mean that the electorate in those areas want it. There may be some areas that do not want it, but that should be a local matter.

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[Gloria De Piero]

rose—

[Graham Stringer]

rose—

[Andrew Jones]

Oh my goodness, I thought I was being helpful.

[Andrew Jones]

No I do not, but I am sure they are available if we go and check. I was only trying to clarify something and provide extra information to help our debates.

[Graham Stringer]

I can possibly help the Minister on this point. I was referring to a number of Transport Committee reports that pointed out what he said: the bus industry was in decline because we had cheap petrol and for all sorts of other reasons. However, a straight comparison can be made from 1985 to 1999 between London— regulated—and the rest of the country. The lines went in the same way, but when the regulated system, without subsidy most of the time, was left in London, passenger numbers remained the same, whereas passenger numbers in the rest of the country went into sharp decline.

Bus Services Bill [ Lords ] (Second sitting)

Graham Stringer Excerpts

Committee Debate: 2nd sitting : House of Commons
Tuesday 14th March 2017 Public Bill Committees

Seamless high-speed connectivity has to be the goal and free wi-fi on buses will help to deliver that. That is why I urge the Government to include in franchising agreements as they come up for renewal a commitment by the operators to deliver free wi-fi on buses. Councils have shown that it can be done; the Government have said that it should be done. I urge the Government to get on with it.

[Graham Stringer (Blackley and Broughton) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Owen, for what I think is the first time.

I will speak briefly to amendment 19. Punctuality and reliability are extremely important, as my hon. Friend said, in persuading people to continue to use buses and attracting people back on to them. The problem is that on many occasions it is difficult to know why the bus does not turn up or is late. Bus companies blame congestion—which is, no doubt, part of the problem—for affecting their reliability and punctuality, and they ask for more privileged use of public sector road space via bus lanes. I do not completely accept that, because the last time I looked at hard statistics—I would be interested if the Minister had up-to-date statistics—I found that about a third of reliability problems were to do with bus companies not maintaining their vehicles properly, resulting in mechanical breakdowns, and another third were due to drivers not turning up and there being no reserve pool to deal with that. It is obviously in the commercial interests of bus companies, and perhaps, on many occasions, of bus passengers, to have bus lanes, and each case should be considered separately against agreed criteria, but we really need to know why things are going wrong.

This is a slightly historical case, but some years ago the FirstGroup buses in Rochdale were in such poor condition that the wheels fell off while they were going along. The traffic commissioner wrote a report about it and the company was fined. FirstGroup does not therefore have a great record. It is also the case, not just anecdotally —there is some evidence, and even more anecdotal evidence—that when buses are delayed for whichever of those three major reasons, they do not complete the route. They take shortcuts. It would be in the interests of public service if each bus had to carry a GPS, so that under the deregulated system, and more so under a franchised or an enhanced quality partnership, the taxpayers and the local transport authority could know where the buses were at any particular time. I would interested in hearing whether the Minister thinks that all buses being required to carry GPS, and have its information made public, would help our understanding of what is happening to bus services.

[Andrew Jones]

Amendments 19 and 20, tabled by the hon. Members for Cambridge, for Nottingham South and for Scunthorpe, propose that the Bill explicitly state that bus punctuality, journey speeds and the provision of w-fi are standards that an authority could specify as part of a franchise contract. Any authority that chooses to implement franchising will be free to determine which services run in an area and the standards of services, including those important matters. Authorities will have to consider as part of their assessment of the proposed franchising scheme whether the proposals represent value for money and are affordable, taking into account the costs of requiring those standards.

I think we all agree that the provision of wi-fi on buses is an extremely attractive prospect for customers. I entirely agree that where an authority wants to require the provision of wi-fi on services, it should be able to do so, and the Bill allows for that. In terms of bus punctuality and journey speeds, there is nothing in the Bill to prevent an authority from specifying the standards it expects from operators running services under franchise contracts.

I was asked about journey time guidance. We said to the Transport Committee that we would produce guidance on setting journey time targets. We intend to do that, though I recognise, as the hon. Member for Cambridge rightly said, that the guidance is not yet drafted.

The provision of customer information was at the heart of the contribution from the hon. Member for Blackley and Broughton. He is right; customers do not always have access to the level of information that is desirable to let them plan their journeys or be communicated with should there be a problem. The Bill includes clauses on open data, and making information available will hopefully create fantastic new products through which customers can receive that information. The open data powers in clause 18 are sufficiently broad to require real-time information for all buses to be provided. That requires GPS on the buses.

I would like customers outside London to have access to the information that is available to bus customers within London, but the amendments would make provision for something that is already provided for. This is about local decision making, rather than making things mandatory. I assure the hon. Member for Cambridge that the Bill already gives franchising authorities powers to set the standards he seeks, and I hope he will therefore withdraw the amendment.

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This amendment removes a requirement that, under a franchising scheme, new buses providing local services must meet eligibility requirements contained in the “Low Emission Bus Scheme” (a programme of grants to support the use of low and ultra-low emission vehicles), where the vehicle comes into service after 1 April 2019.

[Graham Stringer]

I beg to move amendment 34, in clause 4, page 16, line 9, at end insert “, reflecting local conditions.”

This amendment would clarify the scope of comparing a scheme during the assessment of a proposed franchising scheme.

[The Chair]

With this it will be convenient to discuss the following: amendment 35, in clause 4, page 16, leave out lines 32 to 36.

This amendment would remove the requirement on the Secretary of State to issue guidance on the preparation of an assessment of a proposed scheme.

Amendment 36, in clause 4, page 16, line 35, at end insert—

‘(5A) In preparing guidance, the Secretary of State must ensure that it is not over-burdensome on the authority.

(5B) The guidance shall specify that the authority may decline to assess a potential scheme if the bus operators have previously proved unwilling or unable to implement similar schemes.

(5C) The guidance shall specify that the ultimate decision to go ahead with any scheme will rest with the authority.”

This amendment would prescribe some of the content of the guidance on preparation of an assessment of a proposed scheme.

[Graham Stringer]

The amendments cover two general areas. One is the principle that has reared its head in nearly every debate: centralism versus localism, devolution versus keeping things at the centre. The second is what controls and criteria are at the centre. To put it another way, it is about whether the hurdle in the Transport Act 2000—it said that franchising could be introduced only if it was

“the only practical way of delivering better bus services”—

was an impossibly high hurdle to pass. The hurdle is not quite as high as that in some of the guidance, but I am concerned that high hurdles are being introduced that will make it more difficult to set up a franchising scheme.

I will speak first to amendment 35 and then to amendments 34 and 36—it is easier to take them that way. At the end of the debate, I should like to press amendment 36 to a vote, unless the Minister, having heard such persuasive arguments, is willing to accept it. That would be a pleasant surprise, but in the absence of that happening, I will press it to a vote.

Amendment 35 would remove the Secretary of State’s right to issue guidance on the preparation of an assessment of a proposed scheme. Local authorities have to act within the law. They have to act in a reasonable way. They cannot act in a unreasonable way, otherwise council tax payers and interested companies can judicially review them. There is a lot of history where local authorities have been unreasonable in their behaviour and have lost.

Why do we need a centralised set of rules from the Secretary of State? I do not want to repeat the debate that we had earlier, but I mentioned that there are good officials at a local level and good officials at a central level; and good elected councillors at a local level and good Ministers and Members of Parliament at a national level. There are also poor ones. The question why this should be centralised was not answered.

The Department for Transport and its officials will draw up the guidance. In another franchising area—railways—the Department completely messed up the west coast main line. The Minister is looking puzzled, but I will take him back to the summer of 2012, from memory, when the whole of the franchising operation had to be abandoned because the Department got it wrong.

The Bill says that the same Department should have precedence over local officials and be able to set guidelines. Not only is the competence of the centre not proved, there is also duplication. If I stray back into railways, with your indulgence, Mr Owen, Transport for the North was meant to be devolved. What happens in the Department? A whole team of people is set up to mark and check on what is happening in the devolved authorities. The cost of officials doubled. In the previous debate when I asked the Minister whether there would be more or fewer officials at the centre at the end of this, there was no reply.

The Minister has not made the case that, in allowing franchising in those areas, there should be all those rules, regulations and guidelines. I know I am not allowed to use props, but I have before me the consultation on draft regulations and guidance, which is a mere 150 pages long. That is just the consultation. One hesitates to think how big the eventual document will be when all the i’s have been dotted and the t’s crossed.

We are bedevilled in this country with centralisation, and with people in the Department for Transport who set criteria for pelican or puffin crossings and all sorts of detailed strategies, all of which would be better left to local decision making. I would like the Bill to be about devolution and not to say, “Well, you can take the decisions as long as we agree with them.” I did not take an exact quote when the Minister was answering questions about local control, but he said that was, “All right as long as there was some control from the centre.” That is not devolution. Mistakes will be made locally, as they are nationally. Why would one set up the inefficient system of a national scheme marking local schemes to make it doubly expensive and probably more likely that mistakes happen?

I guess the Minister will not accept the logic of leaving local authorities on the spot to take decisions in the way in which they normally do. Some of those local authorities are huge in terms of resources. Why does the Secretary of State know better? I have no idea whether Kent County Council wants to franchise buses because it is the other side of the country from where I represent, but it is a huge authority that has had good leadership over the years—not from the Labour party—and it might want to take those powers. Why should it or its districts, or Lancashire or its districts, not take the powers? Those are well run councils that take decisions in a legal way.

Amendments 34 and 35 assume that the Minister will not accept amendment 36. Amendment 34 would change proposed new section 123B(2)(b), which says:

“The assessment must…compare making the proposed scheme to one or more other courses of action”,

by adding “reflecting local conditions” at the end. Why would an assessment not be about reflecting local conditions? I was teasing when I said that he would accept amendment 35, but I cannot see how amendment 34 would not improve the Bill by making it clear that any scheme drawn up should reflect local conditions. The purpose behind that is to ensure that any guidance and regulations are not over-burdensome on a local authority.

Assuming that guidance, regulations and process is to be determined from the centre, amendment 36 says three specific things, which would limit that guidance so that it is not over-burdensome. The first subsection of this amendment, says:

“(5A) In preparing guidance, the Secretary of State must ensure that it is not over-burdensome on the authority”.

What could be wrong with that? There is always a tendency, under any political party, for the centre to put bureaucratic costs on to local government. Actually stating explicitly in the Bill that this is a bad thing should be accepted. The Minister surely cannot think that any regulations should be over-burdensome, to use the opposite argument. I hope, even if he does not accept it now that he will consider it when the guidance is being drafted. I quote the draft consultation in support of this—I realise that this is a draft consultation. If I quote paragraphs 19 and 20 of “Annex N: Franchising Guidance – Assessment of proposed franchising scheme (“Business Case” guidance)”, you will see, Mr Owen, that it is already beginning to get burdensome:

“Identifying realistic options should not be a desk exercise however, and authorities should engage with bus operators in the area and explore whether, for example, there is a realistic partnership proposition or ticketing solution that should be considered and assessed alongside the franchising proposition”.

I could go on forever. I have tried to ameliorate that and I hope that the Minister, when he is looking at this guidance, will take that into account.

The amendment goes on:

“(5B) The guidance shall specify that the authority may decline to assess a potential scheme if the bus operators have previously proved unwilling or unable to implement similar schemes”.

Again, what could be wrong with that? My hon. Friend the Member for Nottingham South quoted Brian Souter, who I think is typical of some in bus companies who, because they have been in a non-competitive, almost monopoly situation on many of the routes, hate this. They have resisted ticketing schemes, in some cases, and other schemes that would have improved bus services, so why should a local authority which has had reluctant and recalcitrant bus companies that have resisted it, have to consider something that has already failed when it has a franchising scheme to improve bus services for residents?

Finally, we come back to our old friend, the question of who takes decisions, the Secretary of State or local people, having gone through whichever process it is—the guidance or whatever. I think it should be stated in the Bill that the ultimate decision to go ahead with a scheme should lie with the franchising authority. I hope that the Minister will accept Amendment 34 because it is relatively straightforward and common-sensical. I hope that on Amendment 36, when the Minister is looking at the guidance and the process for franchising, he will take my comments into account, even if he is not prepared to accept it before. Amendment 35 just rehearses the substantial argument about having real decentralisation and devolution.

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[Andrew Jones]

We are discussing a group of amendments that relate to the assessment or the business case that authorities must prepare before they can implement franchising. The Government’s aim is to ensure that authorities fully consider the benefits, impacts and potential risks of franchising before taking the decision on whether to go forward and implement it in practice.

The Bill requires authorities to conduct an assessment of their proposed franchising scheme, which should include comparing it with one or more other courses of action. Amendment 34 aims to ensure that the different courses of action that should be considered as part of that assessment should reflect local conditions. I entirely agree that authorities should compare their franchising proposal against other realistic courses of action—that just seems good practice—and that those realistic courses of action will be different in each case. The Bill does not set out what other courses of action franchising should be compared against; it will be for local authorities to decide what is appropriate. The draft guidance that we are currently consulting on highlights that further by explaining that the authority should consider which courses of action are likely to meet their objectives. I hope, and I assure the hon. Member for Blackley and Broughton, that amendment 34 is not necessary; he may consider withdrawing it.

Amendment 35 proposes removing the requirement of the Secretary of State to issue guidance for authorities to assist with the preparation of their assessments, while amendment 36 proposes adding new requirements to the contents of such guidance. Our intention has always been to assist authorities in preparing robust assessments by providing guidance. The draft business case guidance is 10 pages long, which is much shorter than that for many other schemes or projects. It has actually been developed in discussion with authorities that may use it in future. It is about seeking to help authorities, particularly by reducing their risk of being challenged for not considering other realistic options, which could save time later on—particularly in any kind of legal matters.

I recognise the point about rail franchising, but I think that actually highlights the scale of the decision to go down a franchising route and how these things have to be considered and planned for carefully. On whether local government or national Government are infallible, the hon. Gentleman and I both know that neither is and can throw up a litany of records to demonstrate that. However, this is about having safeguards in place for decision-making criteria; it is not about national control. He highlighted Rail North, but Rail North is a partnership between the Department for Transport and Transport for the North to manage the north’s two rail franchises—Northern and TransPennine. Rail North was involved in designing the programmes and judging the tenders, and is now involved in managing the franchises; it is actually the first time we have moved to a more devolved management of our railways. The team, which is a joint team of the DFT and Rail North, is based in Leeds and will ultimately become part of Transport for the North. That is quite the opposite of the national control that the hon. Member for Blackley and Broughton highlighted—it is about devolution in rail for the first time. When we look at what has happened with rail in the north—the franchises will offer quite a transformation to services and be much more tuned in to their customers—we see the progress that is made by having more local decision making.

The guidance is intended to help authorities through the process and give them some national guidelines with criteria for consideration; we have no intention of making it onerous. This is more about sharing best practice and stopping reinvention when it comes to routes that are new to authorities. Our intention is to assist authorities in making robust assessments, and we are keen to receive views through the consultation about how the guidance can be further improved. I am pleased to be able to reassure hon. Members that our draft guidance recognises that it is for the Mayor or the authority to decide whether to proceed with franchising—it is not a national decision, and central Government should have no further involvement. I can also confirm that it is not our intention to place any unnecessary burdens on a franchising authority through the guidance.

Our approach is based on the standard approach to decision making in government set out in the Treasury’s Green Book. We actually drew the phrase “compelling case for change” from the Green Book. The assessment that a franchising authority is required to develop is based on the principles of the “five case” model for public sector business cases. The draft guidance on the development of that assessment therefore draws on the associated Treasury guidance material on using the five case model, which states:

“The business case in support of a new policy, new strategy, new programme or new project must evidence: That the intervention is supported by a compelling case for change”.

This is not a question of the Government seeking to impose burdens; we are seeking to assist and streamline decision making while keeping it local. That model is an established mechanism that any authority that has ever brought forward plans for a significant transport project should be well used to, and it seems entirely appropriate to follow a similar proven approach for fundamental change to the delivery of bus services, which of course will affect many thousands of passengers every day.

The hon. Member for Blackley and Broughton asked about the number of officials. I can tell him that there are absolutely no plans to increase the number of officials currently working on this area, except in one section: there will be a small increase in the open data team, because significant work is needed to deliver that project. To put that in context, the headcount of the Department overall has fallen by 17% since the 2010 spending review. I hope that, in the light of my comments, the hon. Gentleman feels able to withdraw his amendments, although I recognise that he may wish to press one of them to a vote.

[Graham Stringer]

I thank the Minister for his reply. I will withdraw amendments 34 and 35. I take what he says about amendment 34, although I think it really would enhance the Bill.

I will press amendment 36 to a vote. It would not add to the guidance but prescribe that “the Secretary of State should not go here”. The context of this debate is that bus companies are hostile to these proposals. It is likely that bus companies will end up in court—Nexus has recent experience of that under existing legislation—and it would be helpful to say that the guidance should not be over-burdensome. It would also be helpful—the Minister did not really reply to this point—to say that where schemes have been tried and failed, or bus companies have refused to try them, they will not be reconsidered in some future scheme. I take the Minister’s reassurance that the final decision will be made by the Mayor or the authority. In the light of that, I will press amendment 36, but I beg to ask leave to withdraw amendment 34.

Amendment, by leave, withdrawn.

[Daniel Zeichner]

I beg to move amendment 21, in clause 4, page 16, line 30, at end insert—

‘(3A) An award of any new franchise or contract shall not be made on the basis of labour costs estimated by the potential franchisee or contractor assuming labour costs for new employees at less than the labour cost of workers who are covered by TUPE protections in accordance with section 123X transferring to the new franchisee or contractor.”

This amendment would ensure that any new franchise or contract will not be awarded on the basis of estimated labour costs being lower for new employees than the labour cost of workers covered by TUPE protections.

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[Andrew Jones]

New clause 1, which was tabled by the Government, reinstates the original provision of the Bill, which prohibited authorities from establishing companies for the purposes of operating local bus services. Amendments were made in the other place to remove that provision, which forms a key part of our proposals, from the Bill.

The Bill provides a number of new tools for local authorities to improve their local bus services, and it is important that operators and authorities work together to improve services for the benefit of passengers. We want to ensure that passengers benefit from the strengths of both local authority influence over services and the private sector. We have seen great improvements in services across the country due to private sector innovation and investment. It is also true to say that authorities have a lot to offer, with many around the country working collaboratively with their local operators to ensure that communities are well served and that services and ticketing offers are joined up.

The franchising and enhanced partnership tools in the Bill will provide authorities with more influence over bus services than they currently have. Striking the right balance between local authority influence and the role that private sector bus operators can play is important. Our view is that passengers will see the most benefit where the commissioning and provision of bus services are kept separate. That purchaser-provider split is a frequent feature of our public services, and as such we do not think authorities should be able to set up new bus companies.

[Graham Stringer]

I understand the Minister’s argument, but does he not see the case for transport authorities having the power to set up a bus company as a last resort, where private sector companies withdraw from the area?

[Andrew Jones]

The franchising provisions in the Bill detail what powers an authority has should a franchise service fail, as a stopgap measure, to ensure the continuity of service provision for passengers. I recognise the hon. Gentleman’s point about continuity of service, but we are addressing that in the Bill.

[Graham Stringer]

To press the Minister on that, I take the point about continuity of service where, for instance, a bus company goes bankrupt and can no longer provide a service. However, that was not the question I asked. In circumstances where bus companies withdraw from an area as a point of policy because they are completely hostile to the idea of franchising, should transport authorities not be allowed to set up bus companies?

[Andrew Jones]

I suggest that the answer is no. If an area has a service withdrawn simply because of some kind of principled objection by a bus company to a regulatory model, those would be very unusual circumstances, with the company turning down business. In that case, others would, I suggest, snap it up.

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However, it felt that the prohibition on all municipal operators in the Bill is a disproportionate response, and I hope that when the Minister responds he will explain why he does not accept that recommendation.

[Graham Stringer]

I will be brief, as my hon. Friend the Member for Nottingham South has covered most of the points I wish to make. A reading of proposed sub-sections (1) and (2) shows that new clause 1 is not only disproportionate but authoritarian and ideological. The provision states:

“A relevant authority may not, in exercise of any of its powers, form a company for the purpose of providing a local service.”

That is extraordinary. It goes on to state:

“Subsection (1) applies whether the relevant authority is acting alone or with any other person.”

The assumption behind the proposal is that, in some way, the private sector market is working perfectly and competition is leading to a provision of services everywhere. That is simply not the case. The measure is tying the hands of local authorities that think that they can make a business case to provide a municipal bus company, either on their own or with a private sector partner. That is simply an ideological act. I can see the case that the Minister made, and I would concede that a franchising authority should not be able to award a contract to a bus company that it owns. However transparent the process, that would look strange to anybody outside. I accept that, but there are parts of the country—the shires, for example, and Hartlepool is often mentioned—where bus services are poor and many remote communities do not get a service. Why should the local authorities not get together and provide a municipal bus company where the private sector is failing?

An argument is often used in these cases. If the system we had in this country—and we hope this is the first step in moving away from it—worked so well and provided services efficiently, effectively and economically to people who needed them, why has nobody copied it? Can the Minister show us anywhere in Europe that has said, “Wow! What a wonderful deregulated system you have. We will immediately copy it and we will get rid of all our publicly owned bus companies and invite the private sector in to have a free-for-all. We think that will be a better way to do it.”? I cannot think of anywhere in Europe but perhaps the Minister knows better than I do; that is possible.

There are other arguments in favour, not of telling local authorities they must do it, but of allowing them to do it where there is a need. It would do one other thing: it would provide a benchmark for how bus companies should and could operate, as Directly Operated Railways provided a useful benchmark for the rest of the rail system.

The Minister has praised municipal bus companies. Can he explain why, if something is working so well, we should not replicate it? We probably invent too many different ways of delivering service in this country. When things work, why do we not simply replicate them where there is a need? In debates over the years on franchising, I have argued the case for quality contracts or franchising, and Government Members have said there are excellent bus services in Brighton, Oxford and Norwich, and round the country there are. There are places where the bus service works. There seem to be two factors that make those bus services good while those of us who live in Manchester, Newcastle, Hartlepool and South Yorkshire have seen a dramatic decline in bus services. Those areas are usually historic cities where there has been a restriction on cars, often, but not always, allied with a municipal bus company, so that there has been control and a very good service provided. Will the Government, like any sensible one, allow things that work to happen again?

[Daniel Zeichner]

It is a pleasure to follow both my hon. Friends, who have made their points very well. The new clause proposal has become the cause célèbre of the Bill, doubtless dropped in to wind up people across the country. To that extent it has been successful. We have had thousands of emails from people who are concerned about it. We have seen many representations from councils. We have had exciting photo opportunities outside the Department for Transport. I am sorry Ministers did not feel about able to join them—they would have been very welcome.

The proposal is a sop to those who cannot abide success in the public sector, to those who cannot get over the fact that, year after year, the municipals demonstrate that they can combine efficiency, good value and top-quality service and regularly walk away with all of the awards. As has been said, the proposal flies in the face of the evidence. It is a mean-spirited proposal that prohibits county and district councils in England, combined and integrated authorities in England, and passenger transport executives in England, from setting up companies to provide local services. In short, it is a ban on new municipal bus companies.

We have made it absolutely clear that we completely disagree with this punitive measure, which also contradicts the Government’s supposed commitment to localism. We have already heard from my hon. Friend the Member for Nottingham South about the fantastic reputation and performance of one of those municipals. We could speak about others, but the point has been well made. Sadly, the Government now plan to take this option for local authorities off the table, despite the fact that in a number of areas they have proved that they are successful.

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[Daniel Zeichner]

My hon. Friend is absolutely right. That point goes to the crux of whether the legislation will work in practice. We will not press the amendment to a Division, but I hope the Minister takes careful note of what has been said and ensures that, as authorities consider introducing schemes, they feel reassured that they will be able to do so and not face the risks we have described. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4, as amended, ordered to stand part of the Bill.



Clause 5

Power to obtain information about local services

[Graham Stringer]

I beg to move amendment 33, in clause 5, page 33, line 8, at end insert—

‘(1A) The franchising authority may require the operator to provide information about services run by the operator under existing franchises or in non-franchised markets outside the franchising authority’s area.”

This amendment would ensure that all operator data about operational performance in markets outside the franchising authority’s area is available to them for the purpose of developing a franchising scheme.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 37, in clause 5, page 33, line 31, at end insert—

“(ea) information about the operator’s pension scheme(s) and information about the number of persons employed by the operator in any individual pension scheme;”

This amendment would require operators to share information and particulars about their staff’s pension scheme with the authority.

Amendment 38, in clause 5, page 33, line 34, at end insert—

“(fa) information about journey speed and reliability for those local bus services;”

This amendment reflects the draft regulations and guidance and includes journey speeds and reliability for authorities to consider when developing a case to franchise services.

Amendment 39, in clause 5, page 34, line 2, at end insert “, which shall be no longer than 56 days.”

This amendment defines reasonable period for the purpose of this subsection as no longer than 56 days.

[Graham Stringer]

The purpose of the amendment is to allow the transport authority and franchising authority to ask for and get information from operators about how they operate in adjacent areas, and not just the authority area. The clause amends section 143 of the Transport Act 2000, enabling a franchising authority to request certain information from bus operators of local services in its region in order to inform its business case assessment.

If I may return to annexe N of the Department for Transport’s public consultation, from which I read out section 19 previously, paragraphs 29 to 32 state that there is an obligation on local authorities to

“clearly explain the impacts of the options on different groups in society. This should include passengers, the authority, wider society and bus operators, with both the potential impacts on incumbent operators and the potential benefits to new entrants considered.”

What concerns me about is that authorities are being asked to make assumptions about the future private market behaviour of bus operators, exposing those authorities to unnecessary risk. It implies that authorities must make those assumptions as part of their assessments, meaning that the validity of those assessments is in danger of being compromised by an onerous duty to make assumptions on areas lying outside an authority’s direct knowledge. In addition, it is unclear how those assumptions will assist or inform a proposition.

In addition, proposed new section 143A(3) of the Transport Act 2000 does not currently give authorities the ability to require information about bus services in neighbouring areas. As the business case guidance specifically requires franchising authorities to consider the impacts of franchising on neighbouring authorities and services and transport in their areas, the omission is material and should be rectified by adding provision for information about local bus services in neighbouring areas, as the amendment suggests.

It is recommended that the new obligations be deleted in the first instance. However, if they are to remain in the statutory guidance, a corresponding amendment to proposed new section 143A(3) of the Transport Act 2000 could be made to enable a franchising authority to request from bus operators information about their services outside the authority’s area, including franchising services and non-franchising services elsewhere.

Time and again, we find the Government laying down in a Bill guidance and rules that are burdensome on authorities. I followed the Minister’s previous point, and I can see the case that he made: if local authorities take decisions, they should take responsibility and liability for them. But the other side of that coin must be that they are in charge of the rules and regulations within the law as it stands. We will return to this point on Report, but we keep coming back to it: the rules are onerous and burdensome, and will leave any franchising or transport authority open to legal challenge, because they are complicated and derive from elsewhere.

I hope the Minister accepts the amendment, but there is a deeper issue: the guidelines do not protect transport and franchising authorities as well as they could from potential challenge by hostile bus companies that do not want to lose their monopolies.

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[Andrew Jones]

This group of amendments relates to the information authorities can request from bus operators in connection with their franchising functions. Amendment 33 would require bus operators to provide information to authorities about the services they operate under existing franchises and outside the franchised area. The purpose of clause 5 is to ensure that authorities have the information they need about the services in their area so that they can make an informed decision. I therefore struggle to see the rationale behind requiring them to provide information about services that are unconnected to the scheme they are developing or their area.

[Graham Stringer]

Business case guidance, as I said, specifically requires the franchising authority to consider the impacts of franchising on neighbouring authorities and services and transport in their areas. Surely that is a reason why the bus companies should hand over information about what they are doing in those areas.

[Andrew Jones]

The hon. Gentleman is talking about considering developing schemes and the impact on bus provision in neighbouring areas. It does not necessarily suggest that entirely unconnected areas need to have information about franchises beyond the area directly under consideration. I understand where he is coming from, but the information described in the amendment would not be material to an authority’s assessment. I am not convinced that there is any need for the authority to have access to it. I hope he considers withdrawing the amendment.

Amendments 37 and 37, tabled by the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), propose to add new categories to the list of information that can be requested by an authority—in particular information about an operator’s pension schemes, and about journey speeds and reliability. Clause 5 already allows authorities to request information about people employed by operators. That will include information about their pension arrangements. That is clearly a material consideration and will be included. I am not convinced therefore that amendment 37 is necessary.

I agree that an authority may want to consider information about journey speeds and reliability when conducting its assessment, particularly to understand where there are congestion hotspots. Having said that, I would like to think that any authority with the skills and abilities necessary to implement a franchising model already has a clear view of where congestion problems are in its network. There are other ways that the authority could access that sort of data without placing burdens on operators, such as through existing punctuality and timetable information and roadside monitoring equipment.

We are currently consulting on draft regulations under the clause that set out further categories of information that can be requested by authorities. If a clear case is made through our consultation that journey speed information would be a valuable addition to that secondary legislation, we will certainly be happy to consider it, but I am not convinced today that we should place it on the face of the Bill. I hope I have provided the hon. Member for Cambridge with reassurance that the issue will be addressed and that he will therefore not press amendments 37 and 38 to a vote.

Amendment 39 would require operators to provide the requested information within 56 days rather than at the end of a reasonable period that the authority may specify. We want to ensure that we leave as much flexibility as possible to allow authorities to work with operators on a local level. In some cases, the information requested will be very limited and could be provided in a shorter timescale. We also have to consider the full range of possibilities and give due consideration to smaller operators, which may have more difficulty collating and sharing information when their limited resources are focused on doing the day job and running their existing services.

The Bill will allow authorities to take local circumstances into account and set realistic and appropriate timescales for delivery, without an arbitrary cap. If an operator fails to take all reasonable steps to respond to a request, the Bill requires the franchising authority to report it to the traffic commissioner, who then has the ability to impose sanctions on operators that contravene that requirement, provided that the commissioner agrees with the authority that the operator has not taken all reasonable steps to respond. Given that flexible approach, which I believe will work well in practice, I ask the hon. Member for Cambridge to withdraw amendment 39.

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[Graham Stringer]

I may return to amendment 33 on Report, along with a number of other items. I beg to ask leave to withdraw the amendment.

[Daniel Zeichner]

I am reassured by the Minister’s comments on amendment 37, about pensions. That is helpful and clarifies the situation.

I am less reassured on the other two amendments. It is not my experience that authorities have this information. A lot of this information is held by the operators. They are running their businesses and quite clearly need it to run their day-to-day operations. Potential franchising authorities do not necessarily have that information. As I suggested earlier, my visit to my local traffic commissioner confirmed what I already rather suspected—that the responsibilities of traffic commissioners are not matched by the resources at their disposal. I am certainly led to understand that the old system whereby people used to be sent out to check on reliability and so on are long gone. I will not press the amendments any further, but I am not convinced on that point.

Finally, I think the Minister is being a touch naive to think that all the major operators will necessarily want to co-operate in that way. Having a fixed timeframe is absolutely right, possibly with an exemption for smaller operators. We should not be under any illusions: some of these processes will not be as smooth and amicable as we would all wish.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

Clause 6 ordered to stand part of the Bill.

Schedule 2

Further amendments: franchising schemes

Bus Services Bill [Lords]

Graham Stringer Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 27th March 2017 Commons Chamber

[Mrs Miller]

I am not arguing against having local strategies, but a number of issues to do with the provision of services have a national resonance. The Government have identified this problem in the provisions on information that is available to bus passengers when they are on buses. That is nationally applicable. I am simply asking the Minister whether he will confirm what further thoughts he has given to ensuring that what is good enough for train operators is good enough for bus operators in respect of disability access.

[Graham Stringer (Blackley and Broughton) (Lab)]

I support the amendment and want to reflect the huge consensus in Committee on this issue. We divided on a number of matters, but it was a relaxed Committee and the Minister gave reasoned answers. The Bill represents a first step towards a change in attitude to buses. It was brought about following negotiations between the then Chancellor of the Exchequer and various metropolitan areas. A deal was reached whereby elected mayors could re-regulate bus services. I hope that this is just the first step.

I ask the Minister to reflect on this issue in a developing situation. The new Prime Minister has brought in an industrial strategy, and there is a strategy for the railways, as has been mentioned, as well as a strategy for aviation. It is rightly difficult to think of areas where large amounts of public money are spent where it is not the responsibility and the right of the Government and elected representatives to define the objectives that that public money should provide.

[John Pugh (Southport) (LD)]

The hon. Gentleman mentioned a connection between directly elected mayors and bus deregulation. Does he see any logical or sensible connection between the two? Is there any reason why the two should go hand in hand?

[Graham Stringer]

It was a pragmatic decision taken by the then Chancellor and the combined authorities in metropolitan areas. There is obviously no rational basis for deciding to have a different bus system in Greater Manchester from that in Southampton, for example. What would be the rationale for that? Clearly, there is none.

The point I was making is that, having taken the first step—not necessarily consistently, but in a sensible way in the metropolitan areas—it is right to look for a strategy that would help us to get rid of a relic of ideological Thatcherism from the early 1980s, which was seen in the Transport Act 1985 that deregulated buses. What the absence of strategy says is that we do not care how many millions of pounds have gone into the bus industry since 1986 when the 1985 Act came into force. I do not know, but I would have thought that over 31 years we are talking about a large chunk out of £100 billion being spent without any policy direction at all over that spending.

What we have been left with is a rather sterile debate. On the one side it is said that buses are declining and they would have declined in any case over this period. On the other side, there are those who think that that decline was not necessary. They say that without on-road competition, which has failed, with better competition at the tender stage and with a clearer decision on what bus services were needed and what fares should be charged, we would not have lost so many bus routes and bus passengers as we have. Not having a strategy over the last 31 years is saying that it does not matter that two thirds of bus passengers have disappeared in Greater Manchester and that bus fares have gone up considerably more than the rate of inflation. But these things do matter.

As both the right hon. Member for Basingstoke (Mrs Miller) and my hon. Friend the Member for Cambridge (Daniel Zeichner) have said, the vast majority of the people we represent, particularly the poorer people who do not have access to a car, rely on buses to get to work, to get to a hospital and to see relatives at weekends, but after deregulation, many of those bus routes no longer existed. How could we not have a strategy in view of that? How could we abandon those people?

[Victoria Borwick (Kensington) (Con)]

Following on from what the hon. Gentleman says about a strategy, it is important to ensure that we have better records on bus safety. I ask the Minister to look again at what record keeping we have on this issue. Of course we publish the number of people killed or seriously injured, known as the KSI, but many other injuries are caused by buses. I can speak only about the London experience, but it would be really helpful if, as we put into place our overall plans for transport, we think of some way of recording minor as well as major incidents, so that we can provide everyone with assurances about the safety of buses.

[Graham Stringer]

That is a pertinent point. However, a bus strategy would cover all the issues: personal safety, disabled access, fares, and where buses were running. It is clear from the interventions and the speeches that we have heard from Conservative Members, both today and in Committee, that that is where the central view of the House lies, and I think that that will be the direction of travel even if the new clause is not accepted on this occasion.

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[Graham Stringer]

I do indeed recall the time and effort spent on the Committee’s reports with my hon. Friend. They show that competition does not take place on the road—that is a myth—and that we have left the public purse vulnerable to parasites like Brian Souter who have taken money out of it while putting up prices and reducing the service.

There will be a rearguard resistance from people who have benefited from the system, but we, as parliamentarians who have a duty to look after raised taxes, should support the consensus in favour of a bus strategy that I believe exists in the House. After all, there are strategies throughout the rest of our transport system.

[Huw Merriman (Bexhill and Battle) (Con)]

Like the hon. Member for Blackley and Broughton (Graham Stringer), I was a member of the Bill Committee, and was pleased to contribute to what was, as the hon. Gentleman said, a consensual discussion. It was very well piloted by the Minister, to whom I was grateful for sending a Double Decker chocolate bar through the internal mail. Sadly, owing to the internal mail system, it looked more like a bendy bus by the time it was opened, but I was grateful none the less.

There is much in new clause 1 that is attractive, but I think that, given the improved local data requirements in the Bill, it should be perfectly possible to fix the strategy on a local basis rather than needing some form of Government top-down approach. The essential aim of the Bill is surely to bring about more localism.

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[The Parliamentary Under-Secretary of State for Transport (Andrew Jones)]

It will be useful for me to cover all the amendments in one, hopefully fairly detailed, set of replies.

New clause 1 would require the Secretary of State to develop and publish a national bus strategy—which we discussed at some length in Committee, where I am glad the discussions were considered, reasonable and helpful—and to consider a reduced fare concessionary scheme for young people aged 16 to 19 as part of the strategy. New clause 2 would require the Secretary of State to publish a report setting out the possible steps to support local transport authorities to provide concessionary bus travel to apprentices aged 16 to 18.

While the Government fully appreciate the importance of public transport for young people, particularly those living in more isolated areas, we also recognise that the cost of transport can be an issue for some young people, including those who are participating in apprenticeships. One reason for the introduction of the 16-to-19 bursary fund was to help with transport costs. Funding is allocated to schools and colleges and is used to support disadvantaged young people who need the most help with education and training costs, and the 2015 evaluation showed that nearly 400,000 young people were being supported. However, the statutory responsibility for transport to education and training for 16 to 19-year-olds rests with local authorities, enabling them to make decisions that best match local needs and circumstances. Many authorities and operators already offer discounts for passengers in that age group.

Both issues relate to funding. In Committee, I made it clear that the Bill is not about funding; it is about providing authorities with new tools to help them improve local services in a way that best suits their areas. As part of the 2015 spending review, my Department is protecting the bus service operators grant at current funding levels until 2020-21, already providing significant certainty of funding for bus services without the strategy proposed by the hon. Member for Cambridge (Daniel Zeichner). The funding is provided directly to local authorities and to bus operators and is not broken down into categories of service or by route. Attempting to do so would be a burdensome exercise that could risk embroiling central Government in the fine detail of local bus service provision.

At the heart of the question about a national strategy is the fact that the Bill relates to local bus services. It is not about a top-down, national plan. Buses are local by definition and play a key role in local transport planning. That is why we are seeking to support local councils with more powers. A national plan is not the answer. More powers for local authorities are part of the answer, and they are what the Bill provides.

[Graham Stringer]

One of our few disagreements in Committee was about what should be determined locally and what should be determined nationally. When the Government are spending billions a year on bus services, does the Minister not think that they should take an interest in there being more bus passengers and more bus miles and in what the fares should be? That could be stated as part of a strategy. In that respect, what is the fundamental difference between buses and trains?

[Andrew Jones]

I am happy to agree entirely that buses are a critical part of any local transport mix. I am a great champion of bus travel, which has been made clear in all my work as a Minister and in Committee. However, this is about a local issue, not a national solution. I made a joke in Committee that one of the great truths of business is, “I’m from head office, and I’m here to help.” I often was that person from head office, and I was not always quite so welcome.

This should be about local transport needs, not about a national top-down strategy. Are the Government neutral? Of course we are not, which is why we introduced the Bus Services Bill and protected the bus service operators grant, but ultimately this is about local authorities working in partnership with local bus operators to deliver the right services for their area.

[Graham Stringer]

The Minister is being typically generous in giving way. If it is about local decisions, why will he not devolve the bus service operators grant to local authorities or elected mayors?

[Andrew Jones]

Some of the grant is already devolved to bus operators, but the key reason not to devolve it further is that it goes direct to bus operators, which very frequently operate routes that cross council boundaries. Council boundaries and bus routes are not the same thing. Transport to work has nothing to do with a local authority’s geography, so it would potentially be a bureaucratic nightmare to change the system.

Having said that, we are considering how to reform the BSOG operation. The grant pays a flat 34.57p a litre in subsidy, which is why it used to be called the fuel duty rebate. We are considering how to incentivise better practice, rather than just rewarding bus operators for using fuel, which is not good practice.

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[Sir Henry Bellingham (North West Norfolk) (Con)]

I rise to support amendments 14, 16 to 23, 15 and 24 to 28, which are in my name and those of my right hon. and hon. Friends. Amendment 14, which is very straightforward, would ensure that a local transport authority could not make a franchise scheme if passenger benefits can be provided by a quality partnership scheme, an advanced quality partnership scheme or an enhanced partnership scheme.

Amendments 16 to 23 are mainly drafting amendments, but it is important that a franchising authority should be satisfied, rather than that it should just have considered the issues in a franchising assessment. As we heard in the debates on clause 4, it is clear that franchising should not be an easy option. A local transport authority should not be allowed to take a simple punt at franchising without having given full and detailed consideration to all the other options available. There will of course be other options, not least the partnership arrangements that we have looked at, and to which we will surely return in the near future.

The Bill contains stringent tests, but I think it would be very easy for a local authority to say that it has considered whether a proposed franchise regime would contribute to its transport policies; whether it has the capability and resources to operate the scheme; or, just as importantly, whether it can afford the scheme and that it represents value for money for local taxpayers—in other words, our constituents. It is quite another thing, however, for the authority to say that it is satisfied that its proposals will do these things. Surely, given the importance of the step the local authority is proposing to take in implementing a franchise scheme, it is not too much to ask whether it is convinced that its proposals will do exactly what they intend. That is what my group of amendments sets out to achieve.

Amendment 15 simply complements amendment 14, although it looks at the issue from a slightly different angle. I will not say anything more about amendment 15, except that we cannot really have amendment 14 without amendment 15. Amendment 15 requires a franchise assessment to specify the benefits of a proposed scheme for passengers and to explain why those benefits can be delivered by a quality partnership scheme, an advanced quality partnership or an enhanced partnership scheme.

Amendment 24, probably the most important amendment in this group, is all about compensation. The key is to bring into play a degree of fairness. The Bill is silent on the matter of compensation and I think that is wrong. I know what the Minister will say in his response. He will probably say that he will go along with the Transport Committee when it said in its recent report that there is no case for compensating operators who lose their business. I am fully aware that compensation would not have been available under a quality contract scheme, but the days of quality contracts are severely numbered. The fact that there was no compensation under that scheme does not mean to say that it is not right to have compensation for the new arrangements. The loss of business would be bad enough for the large plcs, which would have to redeploy their staff and their assets, but what about the smaller operators?

[Graham Stringer]

I am listening carefully to the hon. Gentleman. Will he explain—so far, he has not done so—on what basis compensation would be given when every bus company is able to compete to run buses via a franchising process?

[Sir Henry Bellingham]

I am not an expert on this, but the small and medium-sized bus companies in my constituency tell me that they are very concerned indeed. They have established their businesses on the back of a lot of hard work, and they have taken a lot of risks. One company that came to see me said that its directors had re-mortgaged their homes and invested their life savings to ensure that the company grew. They stand to lose—not because they have not performed properly, not because they are a bad company, and not because the passengers have decided that they no longer want to use those services—if they do not win a bid to continue to do what they have been doing successfully for many years. I suggest to the hon. Gentleman that this is a fair measure and I ask the Minister to consider it.

The wider point is this: what message does it send to businesses looking to invest in the UK? We want businesses to come to the UK to invest. We should be saying to them, “You’ve come to the UK to invest, and if local authorities take your business off you there will at least be some compensation.” This measure will, in the longer term, represent good value for the taxpayer, because it shows that taxpayers’ money will be put to a good use. If businesses are put out of business because of measures in the Bill, then surely there should be some recourse to compensation.

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[Mrs Ellman]

I want to talk about the new clauses and amendments relating to franchising, including amendments 14 to 23, 26 and 27.

The strength of the Bill lies in devolution, and its proposal that decisions on how to provide local bus services should be devolved to local transport authorities, which should consider what works best in their areas. It is important to remember that the Bill has come about because of dissatisfaction among members of the public—people who want to use buses—with the way in which the current system operates. There have been a number of attempts to change the Transport Act 1985, which deregulated transport services, but none of those attempts —which have been made under successive Governments—has resolved the problem. The Bill is important because it tries to address the difficulties that the public have experienced, and to create a thriving bus sector.

The Transport Committee examined the Bill in detail from the perspective of passengers. We welcomed the possibility of new and smaller entrants to the bus market, but what worries me about the new clauses and amendments is they may prevent the proposed devolution from taking place. There are two aspects of that. The first relates to combined authority areas with directly elected mayors having the power to proceed with franchising. There is a lack of clarity about the regulations that will be introduced, or imposed, to impede the ability of the mayors to do that. Will it be an absolute right, or will onerous, complex and perhaps unknown regulation be imposed? I hope that the Minister will clarify that issue, because it relates to a fundamental part of the Bill.

Secondly, the Bill proposes that transport authorities in areas that are not run by combined authorities with directly elected mayors may have powers to introduce franchising in certain circumstances. The amendments make that proposal extremely complex. It would be impossible to assess whether the transport authorities would be able to proceed with franchising if they wished to do so. The Transport Committee looked at good practice, and concluded that transport authorities should consider existing ways of operating in partnership with operators before moving to a franchising system, but we did not think that that should be part of the regulations. This proposal introduces new hurdles, but it is not fully specified what those hurdles are, or—this is equally important—how they would be assessed before the authority could adopt the franchising system. That, I believe, strikes at the heart of the Bill.

The Bill is intended to improve transport services in localities and devolve to local transport authorities the ability to act on the needs of their areas, but the hurdles introduced by the amendments might enable future Ministers to impede its objectives, and I am sure that present-day Ministers would not wish that to happen. I am extremely concerned about the amendments. I hope that the Minister will tell us more about what they mean, and will make clear whether the Government intend franchising to go ahead, as they have stated, without introducing complex hurdles which would make the proposed system extremely difficult to achieve.

[Graham Stringer]

It is a pleasure to follow my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), who chairs the Transport Committee. As she said earlier, the Committee has considered this issue on a number of occasions, and—my hon. Friend the Member for Gateshead (Ian Mearns) mentioned this—we have never been able to find a reason why London should have one system and the rest of the country should have another. The hon. Member for Wimbledon (Stephen Hammond) grins at that, and I do not blame him, because the regulated system in London is superior to the system in the rest of the country.

I listened to the responses of the hon. Member for North West Norfolk (Sir Henry Bellingham) to my right hon. Friend the Member for Leigh (Andy Burnham) about his not wanting to wreck the Bill, and I take that at face value. However, I do not think the amendments reflect the reality of the nature of bus services, certainly in urban areas. I am not an expert on bus services in Norfolk and suspect the hon. Gentleman knows more than I do about Norfolk, but if he is concerned about small bus companies, he should support this Bill as it is or seek to improve it, because what has happened in the west midlands, Merseyside, Tyne and Wear, Greater Manchester and the great urban areas of this country is precisely the opposite of what he wants: small companies have been driven off the road by large companies.

[Ian Mearns]

I could not agree more with my hon. Friend about the impact on the small bus service providers. When bus services franchising was introduced, I remember visiting Merthyr Tydfil to see Gateshead football club play Merthyr in a Conference fixture, and—lo and behold—there in Merthyr Tydfil were Go-Ahead Gateshead buses being used in a local bus war to destabilise a local small bus company. So in terms of the impact on small and medium-sized bus companies, that particular horse bolted long ago.

[Graham Stringer]

My hon. Friend is right: the deregulation of bus services has not led to greater competition and has not benefited SME companies. They have been literally driven off the roads, because on the odd occasions when there has been on-the-road competition, it has led to congestion and eventually a large monopoly operator taking over. FirstGroup, Stagecoach, Arriva, Go-Ahead and one or two other companies have taken control and have therefore been able to exploit the situation through introducing high bus fares and sometimes withdrawing services for other areas.

[Robert Jenrick (Newark) (Con)]

I have listened with interest to the hon. Gentleman’s comments on small and medium-sized bus companies, and there is a lot of truth in what he says about the smallest bus companies, but does he agree that the greatest concern is for medium-sized operators? There are not many medium-sized companies in the country, but there are some in counties such as mine, Nottinghamshire, and neighbouring Derbyshire: Marshalls of Sutton on Trent and trentbarton —which the hon. Member for Nottingham South (Lilian Greenwood) will be familiar with—are good medium-sized bus companies and they stand to lose a lot from this. They will grow exponentially if they win a franchise or, in the case of either of those companies, they could find 30 years of hard work going down the toilet with no compensation whatsoever.

[Graham Stringer]

The hon. Gentleman makes a fair point, and I will come on to it. He is right to be concerned about that, but I want to develop the logic of the argument that I am making as to why these are not sensible amendments. In large parts of the country, where most bus passengers are, we do not have competition. The basis of the Transport Act 1985 was that there would be on-the-road competition and that would provide good services, and if bus companies lost out because of on-the-road competition, they lost out as in any other capitalist-competitive market situation. That has not happened, however; we have moved to monopoly.

Incidentally, when the 1985 Act was implemented in 1986 no compensation was paid to those bus companies—of which there were a number—running on regulated routes. Mayne in east Manchester, for instance, had run for many years in that area; when it had to compete, it did not get compensation.

We are now moving—through principled objectives, in a different way—to a competitive system, in those areas that choose that, because there will be choices for Norfolk, Greater Manchester and other areas at some stage. As with rail franchising, in a competitive situation, when a company loses out, it loses its business, even if it has invested in it previously. In fact, one of the difficulties with franchising is that we end up with investment up front and a lack of investment at the end; that is just the nature of franchising.

On the point made by the hon. Member for Newark (Robert Jenrick) about medium-sized bus companies, that can of course be taken into account in the way that franchises are set up, by local choice. Areas can set them up in as many different ways as they wish, so medium-sized companies could be given the right to tender for routes that fit the size of the company if that was what the franchising authority wanted to do.

That brings me to a point I made in Committee, and which was rejected. Rather than the amendments we have here, I would have preferred the Bill to say that the regulations should not be overly burdensome and that they should reflect local conditions. If they were reflecting local conditions, they could take into account those small and medium-sized companies. There is a large point here, however, and, as my right hon. Friend the Member for Leigh said, the large companies would be more pleased than the small bus companies if these amendments were passed.

There is not a single quality contract in this country, and that is because when they were brought in under the Transport Act 2000, it contained a clause that is very similar to measures here, saying that they are the only practical way of delivering a better bus service. That is an incredibly high hurdle to jump, which is why there are no such contracts. Quality partnerships were referred to; I asked the Minister in Committee how many of them there were in the country, and, after a little help from the officials, we discovered that there were 10. So even quality partnerships are not abundant on the ground in this country. We do not need overly burdensome regulations. We want to make this work because it will improve the service for passengers, be more competitive and lead to better services.

We are not discussing them now, but there are huge guidance notes associated with this Bill, which I think tend to be overly prescriptive. I prefer to rely on the good sense of local councillors; they will make some good decisions and some bad decisions, but there are many bus companies with vested interests who are opposed to this, and if local authorities behave in an unreasonable way, they have the right to apply the Wednesbury principle and go for judicial review.

Rather than having lots of prescriptions, and putting ever more hurdles in the way of locally elected people making decisions, we should rely on their good sense. Sometimes they will get it wrong, as sometimes national politicians in Governments and Cabinets get things wrong, but we can rely on them and the common law, which will ensure that if bus companies feel that they are being unfairly treated and that transport authorities are behaving in an unreasonable way, they can take that to court.

So I hope the Minister will reject these amendments. We have held in the balance throughout our discussions the question of what is central and what is going to help local authorities, transport authorities and elected mayors to make these decisions, and these amendments do not help move us towards having a better local transport system.

[Daniel Zeichner]

There is a wide range of amendments in this group, many of which we support, but some we do not.

I genuinely hope that the Minister will consider new clause 4 on bus safety, despite his comments in Committee. More disappointment has been expressed to me on that aspect of our Committee discussions than on any other, partly because the comments of the Minister in the other place had been encouraging, but also because I cannot believe that there is any disagreement on the value of improving bus safety, and this is widely seen as an effective and cost-effective way of achieving that goal.

I think the Minister suggested in Committee that he might be minded to insert some guidance to encourage bus operators to sign up, but the evidence on voluntarism is clear: to my knowledge, no bus operator outside the London franchises is signed up to any independent, confidential incident reporting system. We have an opportunity now to end that situation. As my hon. Friend the Member for Gateshead (Ian Mearns) said, such a system is not expensive. It works in the railway industry, and I have not heard a strong case made against it. It seems to work well and I urge the Minister to grasp the opportunity.

Amendments 14, 16 to 23 and 15 appear to us to be unnecessary and to go against the spirit and devolutionary nature of the Bill. The assessment process laid out in the Bill and the extensive guidance—168 pages—available for it are extremely thorough and tough, and do not need to be added to. Amendment 24 undermines the assessment made by the Government of the issues relating to compensation and sufficient time to enable operators to plan. Provisions already in the Bill fully satisfy all value-for-money considerations. We are pleased that the Minister confirmed on Second Reading and in Committee that the aim of the process is not to put barriers in the way of authorities proceeding to franchising. We fear that the amendment threatens the very heart of the Bill. Amendment 25 also seems to be unnecessary, as additional appropriate independence, rigour and structure for the audit process will be ensured by the Government, to which I think the Minister is about to speak. Amendments 26 and 27 also seem at odds with the devolutionary nature of the Bill, because it should be for elected authorities to make the decisions, based on their local judgments.

We strongly support amendments 6, 7, 10, 11 and 13, tabled by my hon. Friend the Member for Gateshead. The arguments were well made in Committee, and perhaps even more strongly today. In any transfers workers should be properly protected, and we have the opportunity to ensure that. I fear that the Government will choose not to take the opportunity, but I urge them to do so.

--- Later in debate ---

Bus operators are required to give 56 days’ notice of their intention to vary or cancel a bus service. The Bill contains provisions to enable authorities to extend that notice period to a maximum of 112 days, to enable the authority to take steps to ensure that services continue to operate. That is an important point in relation to the amendments tabled by the hon. Member for Gateshead (Ian Mearns). Bus operators of all sizes will still be able to compete when a franchising system is implemented, if that is what is decided locally. Competition will take place off the road for contracts, rather than on the road at bus stops, but competition will still exist. Generally, only operators that choose not to compete or do so unsuccessfully will no longer be able to run services once a franchising model is implemented, and in any event they are free to register new services elsewhere.

[Graham Stringer]

The Minister says that competition will continue, but does he accept the evidence that the Transport Committee took from the Competition Commission, which was that the commission was unable to find much evidence of any on-road competition?

[Andrew Jones]

My point is that competition will move, but it will not disappear from the market. Competition now takes place on the road; it will move from the roadside to the tender. I do not accept that competition disappears from the marketplace. I came to this place from a robust private sector background, where competition was the daily bread-and-butter activity, and I am sure that it can have a positive impact on customer service, innovation, price and so on.

--- Later in debate ---

[Graham Stringer]

rose—

[Lilian Greenwood]

rose—

[Daniel Zeichner]

I will give way to my hon. Friend the Member for Blackley and Broughton (Graham Stringer) first.

[Graham Stringer]

Two have come at once! Does my hon. Friend agree that, aside from the reasons given by the Competition Commission, municipal bus companies can provide a benchmark? In a rational debate, we should be able to get from the Government a reason why, when municipal bus companies have performed in an excellent way, they are not allowed to compete. Does he agree that that reason was not forthcoming in Committee?

[Daniel Zeichner]

I very much agree with my hon. Friend. The point about keeping the market honest is important. When I was first elected as a local councillor, the housing officer told me that one of the roles of an in-house operation was to keep the market honest. That is an important role.