Bus Services (No. 2) Bill [ Lords ] (Second sitting)

Debate between Jerome Mayhew and Luke Myer

Committee stage
Thursday 26th June 2025 Public Bill Committees

[Luke Myer (Middlesbrough South and East Cleveland) (Lab)]

Does the hon. Gentleman accept that the entire structure of combined authority devolution, particularly in Greater Manchester, which has pioneered much of this work, is about the earn-back or gainshare principle? Early public investment results in economic growth down the line, and higher business rates and tax revenue that then fund some of this work. In other words, in the end, it pays for itself.

[Jerome Mayhew]

I am grateful for that thoughtful intervention. In principle, the answer is yes, which is why we legislated in 2017 to allow that in principle and why we supported Greater Manchester through the implementation of the Bee Network. That happened under not Labour, but the Conservatives. However, it comes with financial risk. There needs to be clarity on where the costs are and an absolute, laser focus on minimising them, just like in any other business.

The hon. Member did not say that the forecast in the Bee Network’s business case, which enabled it to get the go-ahead, was for it to make a profit. I accept that there will be periods where it makes a profit and periods where it makes a loss, but it should break even overall. Over the forecast period, however, the plan was for it to make a profit of £94 million—that was how it was sold. For it to make a planned loss in 2025-26 of £226.3 million and change, given the huge cost overruns that I hinted at in Tuesday’s sitting, is a disaster. It makes me wonder where that has come from.

I remember the hon. Member watching with interest on Tuesday as I talked about the more than £17 million overrun on agency bus drivers, because the transport authority had failed to provide enough qualified drivers having misunderstood the nature of the TUPE regulations regarding their transfer from the previous operators to the franchise process. There was also the massive cost overrun on the purchase of bus depots because it was the only buyer in the market. There was an explosion in costs for the purchase orders for new buses, with a surcharge of £40,000 on every bus that Andy Burnham’s Greater Manchester combined authority buys because of the design requirements that he has put in, including bits of leather on the seats—we will not go into the detail of that.

If we are not absolutely laser-focused on the costs, that is what happens. The biggest overrun, which perhaps I should have led with, was the increase in wages. There has been an increase in unionised power—which arguably could be a good or bad thing—and an increase in hourly rates for bus drivers to £16 an hour, which is above the market rate. There are not just bus drivers in a bus company; there are all sorts of other roles as well.

I should also mention the failure to be efficient with the application of capital. In a private organisation, having bus washers is important, because having clean buses is part of the service and it affects the customer experience. Since the Bee Network has been in place, and the local transport authority purchased the depots, there has been a rather unfortunate occurrence whereby the bus cleaning mechanism—the washers—have been out of action for over a year.

The processes and the efficiency within the new structure have to date proved inadequate to get the funding to repair the washers, because that is capex rather than opex. I am assuming that is what the problem is—that it is an unplanned expense, so the authority has to go through the rigmarole of a public sector procurement process. No doubt it will get there in the end, but the consequence is that the bus depot is sending out buses that have not been cleaned for a year. Is that an improvement in service? No, it is not.

I say that not to denigrate franchising. Franchising can be done well—it is not a necessary consequence of bus franchising that there are dirty buses—but the evidence that we have at the moment is that even a really sophisticated operator such as Greater Manchester, with a mayoral combined authority and the financial resources, but without the experience of running buses, suffers very significant bumps along the road. That needs to be addressed. If that is happening in a large local transport authority, what is the likelihood of it happening in a small one—for example, in Norfolk county council in my neck of the woods? That is one of our problems with the Bill.

Going back to amendment 49, proposed new section 123Q(5B) of the Transport Act 2000 deals with intra-boundary services. I am applying the same logic as I did to amendment 47. Why should local transport authorities have the power to refuse to grant a service permit if they are satisfied that there are benefits of the proposed service to the economy of the area, or to persons living in that area, and that those benefits will outweigh any adverse effect on any existing local service?

All the amendment requires is for local authorities to act in the wider interests of consumers—the passengers. The proposed service might have an impact, but if we are satisfied that overall the net benefit is in the positive column and not the negative, why would we not agree to it? Let us think of the passenger—the consumer—rather than the supplier.

The amendment would be a particularly important safeguard if the local transport authority was also the owner of a municipal bus company, which was the supplier of the local services contract. There would then be an added layer of opacity in the process, because the contractor and contracted would be the same organisation. A challenger brand could then come and say that it wanted to provide additional services, and it could be assessed to be net beneficial to the economy or the people living in that area, nevertheless the local authority could refuse to grant a permit, even though it is the operator that would be adversely affected—let us imagine how that would look.

The temptation, of course, would be to say that the award was refused for wholly improper reasons: a circling of the wagons to protect one’s own. I hope that the whole Committee would agree that that would be an improper reason to deny additional access to the people living in the area, and/or to deny a benefit to the economy, yet there would be a strong temptation. If the authority has built its bus service network, and a little so-and-so comes in and demonstrates that it can go one step better, but that would have a negative impact on the authority’s cosy plans, people in the authority are going to think, “I don’t want to be troubled by this.”

Bus Services (No. 2) Bill [ Lords ] (Third sitting)

Debate between Jerome Mayhew and Luke Myer

Committee stage
Thursday 26th June 2025 Public Bill Committees

[Luke Myer (Middlesbrough South and East Cleveland) (Lab)]

I support clause 14 and the Government’s proposed measures. Good decisions depend on good information, and in the East Cleveland part of my constituency we have seen far too many decisions made in a black hole of information, which has seen many routes disappear over many years. I now have many villages left in isolation.

It has fallen to local campaigners to step up and make the case that such routes are socially necessary, including through protests, rallies and so on, to try to save them. That is exactly what happened in the case of the Stagecoach 1 and 2 in my constituency, which was created as a result of a sustained campaign. However, that route is not sufficient, because it misses out certain villages and does not go down the high street in Brotton, for example. It also misses out several residents, of which one example is a lady called Norma Templeman who I promised I would mention in the House. She lives in North Skelton and is 87 years old. She said a few months ago:

“You have no idea how isolated this makes us golden oldies feel.”

I would never use such language to refer to her, because I think she is full of energy, even if she is 87. It should not fall to an 87-year-old lady to campaign to save and extend routes like the Stagecoach 1 and 2, or the demand-responsive transport service that she benefits from, which, again, runs out of money every few months, and there has to be a sustained campaign to try to save it. The entire model is inefficient.

I hope that the mayor in our region will seek to use the powers in the Bill and introduce a franchising model. So far, he is resistant to do that, so I ask for some clarity from the Minister on devolution—which we covered in the previous debate—with reference to clause 14. The principles set out in the various pieces of legislation on combined authorities, particularly the Local Democracy, Economic Development and Construction Act 2009, set out that the role of a combined authority is to act as it says on the tin: to be a combination of the local constituent member councils and their leaders. We have an odd situation in Teesside wherein the councils and their leaders want to have a franchising system but the mayor is resistant to doing so.

In the House on 14 May, I asked a Minister from the Ministry of Housing, Communities and Local Government whether the Government accept the principle of subsidiarity, wherein power should sit in the lowest possible tier of government and local communities should have the strongest say. The Minister accepted that principle in his response. He said that devolution should not just be

“a shift of power from Whitehall and Westminster to a regional or sub-regional body that is far away from communities and the local authority.”—[Official Report, 14 May 2025; Vol. 767, c. 135WH.]

He said the transfer of power is a good, but it is not the “whole job”, and communities should be able to “take control for themselves”. I hope that that is also the case when it comes to these powers. We should not have a mayor sitting above the community—above even the local authorities, which make up the LTA—and not using the powers and the funding that this Government are giving him to act.

For Norma’s sake, and the many Normas in all my communities and communities across the country, I support the clause and the Bill.

[Jerome Mayhew]

With your permission, Sir Desmond, I will deal with this in a slightly different order from that in which the Minister addressed it. I will deal with clause 14 in toto, and then look at Government amendment 6, which removes two subsections from the clause.

Clause 14 amends the Transport Act 2000 by requiring local transport authorities to identify and list services in the enhanced partnership area that are “socially necessary local services”—we have already discussed this at some length this afternoon—and then to specify requirements that must be followed if a bus operator of those services wishes to vary or cancel them. Subsection (2) amends section 138A of the Transport Act 2000, which talks about enhanced partnership plans and schemes, and it requires local transport authorities to identify and list socially necessary local services within their enhanced partnership plans—so far, so sensible.

The term is defined in subsection (2)(c), which inserts proposed new subsection (15) into section 138A and provides a definition of “socially necessary local service” as,

“a local service which—

(a) enables passengers to access—

(i) essential goods and services,

(ii) economic opportunities (including employment), or

(iii) social activities, and

(b) if cancelled, is likely to have a material adverse effect on the ability of passengers to access those goods, services, opportunities or activities.”

That is not necessarily a problem, but it is worth noting that this definition is quite subjective in its application. It is not easily measurable what such a service is, nor is it standardised between local authorities. The Minister will say, “Devolution will allow a thousand blossoms to bloom,” and I conceptually agree. However, I wonder whether, if we have different interpretations of the same term—“essential goods and services”—in different parts of the country, that raises a question about how the provisions will be applied across the board.

I understand the desire to devolve assessments to local need, but the determination does, after all, have commercial consequences for operators. As ever, where commercial opportunities are challenged or threatened, that brings with it a risk of legal challenge. That is why I raise the flag with the Minister—I am not going to do anything about it—that this is a potential future pitfall, where different local transport authorities apply the same definition differently.

If the Minister recognises that the definition is subjective, is he concerned about the risk of challenge? The route to formal challenge within an enhanced partnership structure would typically be by judicial review. Is there another form of challenge that the Minister would recognise as part of this process? What guidance will be given to local transport authorities in the assessment process? He referred to some guidance in his earlier responses; I saw him glance towards his officials. I would be grateful for more detail.

I think the issue can be dealt with through guidance, so it would be helpful to understand what form it will take for local transport authorities. Has that already been formulated? Either way, do we have an indication of when the guidance will be published? It is clearly an important document when looking to turn these concepts into practical policies.

Clause 14(2)(a) inserts new paragraph (ba) into section 138A(3) of the Transport Act 2000, requiring local transport authorities to identify which local services in their area are socially necessary services and to list those services in the enhanced partnership plan. Clause 14(2)(b) inserts new paragraph (4A) into section 138A of the 2000 Act, requiring local transport authorities to keep the list of socially necessary services under review and amend it as necessary. The idea here is presumably to ensure that the list of socially necessary local services reflects any sudden network changes in an enhanced partnership area. So far, so good.