Bus Services Bill [Lords]

John Pugh Excerpts

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

[Chris Grayling]

My hon. Friend is right, but the interesting thing about Cornwall is that it is proceeding without seeking to use those powers, precisely because it has forged a better and stronger partnership with the local bus companies, which are already enhancing those services. That is my point. We are not seeking particular structures in particular places. We are seeking to ensure that we provide the best possible services for passengers around the country. Cornwall is already doing a very good job of that.

[John Pugh (Southport) (LD)]

rose—

[Chris Grayling]

I will give way one more time and then make a good deal of progress, because other hon. Members wish to speak.

[John Pugh]

The Bill will do all sorts of good things, but it conspicuously fails to do anything for young people’s travel or mandate local authorities to consider it. Why not?

[Chris Grayling]

It is somewhat ironic that the hon. Gentleman, whose party has always argued for localism, argues for centralisation of something that I believe should be a local decision. That is a matter for local decision making and local priorities. I have no doubt that Southport Council will take wise decisions about what is best for that town, as will others around the country.

As I said, the franchising powers are not entirely new—they have been available in London for many years—but are being refreshed. Franchising enables local authorities to specify the services that should be provided to local communities, with bus companies competing for contracts to provide those services. Local authorities that implement franchising will have more influence on where and when services run, but they will remain commercial operations, with the private sector providing those services.

That is what happens in London. The deregulation of the London bus market took place in the 1980s, but took a path different from the market outside London. Competitive tendering in London was introduced in 1985, and privatisation of the bus companies took place in the mid-1990s. That has evolved into a network with almost 2.3 billion passenger journeys a year. Those powers are being extended to other Mayors in other parts of the country, to give them the opportunity to operate in the same way as London. The Bill therefore provides for the Government’s intention for all combined authorities with elected Mayors to have automatic access to franchising powers.

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[Andy McDonald]

I could not agree more with my hon. Friend. If this is to mean anything, making this happen in reality must be a smooth and quick process rather than a long and protracted one.

The rationale behind deregulation was that turning services over to the market would give the customer the final say; companies would compete and, as a consequence, would better cater their services to passengers. In theory, it is a competitive market, but in reality most bus services are provided by five large companies that avoid competing against each other. Since deregulation, bus use in metropolitan areas has decreased by a half and in non-metropolitan areas by a fifth. Meanwhile, in London, where buses were not deregulated, bus journeys have increased by 227%, mileage has increased by 74% and London journeys now outnumber bus journeys in the rest of England, while fare increases have been lower than in the city regions.

[John Pugh]

In London, a lot more schoolchildren use buses. Does the hon. Gentleman believe that more could be done in the context of this Bill to encourage youth to use buses?

[Andy McDonald]

I would always want to see our young people encouraged to use our bus services. I was somewhat disappointed when I heard what the Secretary of State said about young people and their access to buses. He might want to reflect on that as the Bill proceeds.

--- Later in debate ---

[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.