Bus Services Bill [ Lords ] (Third sitting)

Debate between Julian Knight and Daniel Zeichner

Thursday 16th March 2017 Public Bill Committees

[Daniel Zeichner]

I beg to move, That the clause be read a Second time.

The new clause would mandate that the Secretary of State for Transport must issue a national strategy for local bus services, setting out the objectives, targets and funding provisions for buses over the next 10 years. Subsection (2) would mandate that the national funding strategy must include consideration of a reduced concessionary fare scheme for young people aged 16 to 19.

We believe that the new clause is necessary and long overdue. The Government have published national investment strategies for road and rail, as well as a draft investment strategy for cycling and walking—the latter is proceeding at a snail’s pace, but I am sure it will be welcome when it arrives—so why not a strategy for buses? The way buses are funded in this country is not simple, as we have discovered during our discussions; it is a complicated mix that has developed over time with piecemeal changes. We might describe it as a very British approach; it sort of works—not well enough, in our view—but almost no one knows how.

What we do know is that almost half of bus industry funding comes from the public purse. Total public support for buses accounted for 41% of overall industry funding in 2014-15, and in 2010-11 that figure was even higher at 46.3%. We know that money goes towards funding socially necessary supported services on routes not served commercially by private operators through central Government’s general grant to local authorities and the reimbursement of bus operators for trips made by concessionary pass-holders, including the statutory older persons’ and disabled passengers’ scheme.

I spent some time during the early years of the concessionary fares scheme introduced by the Labour Government trying to find out how the funding flows worked, not least because many district authorities suddenly found themselves substantially out of pocket at that time. I would like to be able to say that the many hours I devoted to it were well spent, but I have to confess that, despite much help from officials, I never really got to the bottom of how reimbursement rates were calculated and, in some cases, negotiated. I suspect that the number of people in the country who fully understand it could comfortably fit in a small room—some of them may be in this one today.

Large amounts of public money are spent on concessionary fares and the scheme is so popular that subsequent Governments have been reluctant to touch it, yet there is no overall mechanism for assessing the impact on the bus sector. As I have remarked previously, there is not a lot of point in having a bus pass if there is no bus. Other questions are raised, often in areas where buses have disappeared, such as why community transport should not be available through the bus pass scheme.

On top of that complexity, we have the bus service operators grant—BSOG, to those of us who take part in the discussions—which was introduced back in 1965 as the fuel duty rebate. It is a rebate paid directly to operators and dates from a time when it was mainly an accounting transaction within the public sector. Of course, the world has changed considerably over that half-century —at times BSOG has changed with it. I suspect we will revisit that point later in our debate. I am informed by the Community Transport Association that in 2013, 21% of community transport schemes were completely reliant on BSOG, and 75% relied on it to some extent. There is a not insignificant amount of public money being spent.

The Government have argued, as I am sure they will this morning, that since the bus industry is a private one, a national investment strategy is inappropriate and unnecessary. However, where such large amounts of public money are being spent, even if the services are being delivered by private operators, we think it only right that there should be a proper planning strategy for how and why it is spent, as well as plans and objectives for future spending. Indeed, the Government themselves have said:

“Requiring operators to use their assets to provide a free service for a proportion of the population is a major market intervention”.

That is precisely why we need a proper strategy to be set out with clear objectives.

It is pretty clear—this is relevant to our earlier discussions on franchising—that there is scope to get better bang for the public buck. As my hon. Friends have several times said, the largest bus operators report significant profit margins. According to their annual reports, in 2014-15 Stagecoach’s operating profit margin on its regional bus routes was 13.5% and Go-Ahead’s was 13%. Yet those profits are not being shared with the public, despite the fact that large sums of public money are being invested in bus services.

[Julian Knight (Solihull) (Con)]

Surely the point is that profits are being shared with the public, through shareholder dividends.

[Daniel Zeichner]

Shareholder dividends may be shared with some members of the public, but not many of my constituents find such money coming into their pockets. I think they would rather have it more directly, in lower bus fares.

Rather than getting money from dividends, bus passengers pay the price for those substantial profits, because bus fares have been rising. According to the Department for Transport’s local bus fares index, fares in England, outside London, rose by more than 156% between 1995 and 2016, while the retail prices index rose by 77%. That shows that bus fares—and I think that this is virtually everyone’s personal experience—have risen much faster.

Equally, bus companies sometimes tell us that the rising fares are due to rising fuel prices, but a number of us have noticed that when fuel prices go down, fares rarely fall; they tend to remain static. We believe that there is a strong case for a bus investment strategy, and we hope that the Minister will reconsider his objections.

Subsection (2) of the new clause relates to the consideration of a reduced fares scheme for young people. It would simply require the Government to look at and consult on funding options to help young people with the cost of travel. Many young people have to take the bus to school or college, but the number of councils financially able to provide a discretionary young person’s pass has dropped from 29 to just 16 since 2010. With fares shooting up faster than inflation, the Government should look properly at introducing a statutory concessionary fare scheme for young people.

I appreciate that that would be a substantial commitment, but we ask the Government only to consider it and to do the preparatory work. I remember that, when I and others first suggested the older people’s concessionary fares scheme to a Labour Transport Secretary who later became Chancellor, his immediate response was less than encouraging, but popular measures have a habit of making their way into manifestos—and the rest is history.

We all know that for many young people, the cost of getting to college and job interviews, and just of getting out to have a life, is a key determinant of what lies ahead of them. That is why the Opposition thought that the education maintenance allowance was so precious and that it was a mistake to remove it. Agreeing to the new clause would be a first tentative step in repairing the damage to the prospects of many young people and families who might even be described as “just about managing”.

There is not a word about funding in the Bill, yet cuts to local authority budgets have meant that thousands of routes and services have had to be withdrawn since 2010. Young persons’ concessionary fare schemes have been cut, while large operators have experienced generous profit margins. The way buses are funded is not working well enough. We need a proper Government strategy to address the illogicalities of funding, and to bring buses into line with other modes of transport. The new clause would help to achieve that objective, and would send a strong message to young people that the Government understand what life is like for them.

Bus Services Bill [ Lords ] (First sitting)

Debate between Julian Knight and Daniel Zeichner

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

[Daniel Zeichner]

My hon. Friend is absolutely right. That is why there is so much hope attached to the Bill and to the idea that we can go back to having a comprehensive local public transport system that delivers for people. The truth is that we have had a 30-year experiment with an unregulated market, the end result of which is exactly as my hon. Friends describe. This a chance to move forward. In some areas the Government are responding, but in many other parts of the country, it looks as if the hurdles will be too high.

The Minister talked about local decision making and accountability, saying that the Bill is about enabling new opportunities and giving local authorities new choices on how to improve their services. However, as has been said, taking the decision out of the hands of local communities and putting it squarely in the Secretary of State’s hands does not seem like localism to us. It seems particularly peculiar that a local authority must seek consent before taking even the preliminary step of preparing an assessment of a potential franchising scheme. How on earth can a local authority present a compelling case to the Secretary of State to gain approval if they are prohibited from even assessing a scheme?

We understand the Government’s point that strong governance and accountability are key to making franchising a success, along with a commitment to improving transport and to a coherent economic geography. However, we do not understand—my hon. Friends have made this point well—why the Government believe that those things can only be achieved with an elected Mayor. Why are Mayors seen to be more accountable than other elected local authority leaders?

I turn again to my personal experience, because for some reason Cambridgeshire seems to be at the heart of many of these issues. In my area in a few weeks, we will have elections on the same day for a Mayor of Cambridgeshire, who will have powers to franchise buses, and for a county council for Cambridgeshire, with a leader who does not have powers to franchise buses. A great irony is that the current county council leader put himself up for selection for Mayor and made the final shortlist. Therefore, in a few weeks’ time we could have had the same person being elected on the same day to two roles, one of which one would be deemed sufficiently accountable to franchise whereas the other would not. I am not going to tease the Minister by pressing for a reasonable explanation.

[Julian Knight]

The hon. Gentleman seems to suggest that all the power rests with the Mayor. In the West Midlands combined authority, the Mayor is effectively first among equals. The leaders of all the councils who make up the authority have a say in decision making.

[Daniel Zeichner]

Surely that is the case in other places as well. In my area the leader of the county council, who is a Conservative, has been elected and the choice will be made again in a few weeks’ time—however, we shall see what happens in the local elections. I think the local electorate are confused about the situation, based on my experience of what we are seeing on the doorstep, but I think the Minister can see the point. For many people it seems irrational to have so much invested in the mayoral issue.

In reality, we all know what is going on: franchising is being used as a bargaining chip to convince some combined authorities to accept a Mayor that they do not necessarily want as part of their devolution deal. Without going into the chequered history of those negotiations over the past year or two, one could say that they have not always been easy or straightforward. We think that the approach being taken is wrong, which is why we oppose it. Beyond that—this goes back to the points being made by my hon. Friends—the trouble is that what is happening denies bus passengers in many areas the prospect of better services.