Bus Industry

Lord Snape Excerpts

Thursday 18th October 2012 Lords Chamber

[Lord Snape]

My Lords, it is always a pleasure to follow the noble Lord, Lord Bradshaw. I do not have any financial interests to declare in these matters. I should point out that I chair the Bus Appeals Board, which is a purely voluntary post and I have over the years worked for both the National Express Group and First Group on the bus side.

The noble Lord started his speech by referring to the two important factors in running bus services being punctuality and reliability. Unlike him, I am not sure which piece of legislation he was referring to but I am sure that he would agree with me that these matters are largely the responsibility of highways authorities, outside passenger transport executive areas or passenger transport executives—the integrated transport authorities as we are now to know them—within our major cities. I hope that when the Minister replies, he will agree with me that punctuality and reliability do not depend on ownership of bus companies.

I find it depressing that people in my own party, in particular, continually call for reregulation although it is more than 25 years since buses were deregulated. Since then, we have had the back end of a Conservative Government, 13 years of a Labour Government and now two and a half years of a coalition Government, and the 1986 Act has not been repealed. We should make the best of what we have. In many parts of the country, not only are bus services thriving, there are lots of successes to point to without getting into arguments of ownership and reregulation.

I spent most of my working life in the bus industry, although that is a rather flattering description of someone who was chairman of a bus company. Many people who drove buses would not have regarded the chairman as being part of their working lives. But I did mix with them and held a PSV, as it was known at the time. In the West Midlands there has been a considerable number of successes in bus operations that have continued in recent years. Within the past year Centro and a passenger transport authority, or the ITA as it now is, and National Express, the predominant operator in the area, signed a ground-breaking agreement that commits the two organisations to working closely together to drive forward about £25 million worth of improvements for bus passengers across the West Midlands within two years. These commitments from both sides—certainly as far as National Express is concerned— include the introduction of more than 300 new, greener buses, improved onboard cleanliness, a smart card system similar to London’s Oyster card and upgrades to bus shelters and other waiting facilities. They also include more real-time information screening, which will be a great boon to anyone waiting for a bus, specially designed shelters and infrastructures, new passenger information systems, onboard announcements —on which I am not madly keen but they are obviously the thing of the future—improvements to the safety and security arrangements for passengers and the introduction of 40 hybrid electric buses to the region.

However, there is a lack of enforcement of the existing legislation, particularly in regard to bus lane provision. In London we are fortunate: there are lots of buses and most motorists know—they soon find out if they do not—that straying into a bus lane will be immediately followed by a minimum £60 fine. Why do we not have that level of enforcement throughout the country? I presume that is the part of the Act to which the noble Lord, Lord Bradshaw, referred.

[Lord Bradshaw]

Perhaps I may extend that. I am particularly concerned about yellow-box junctions and right turns, which are clogging the roads. Local authorities need to have the power to deal with moving traffic offences. They can film the offence but they cannot do anything about it.

[Lord Snape]

I am grateful for that clarification. I agree entirely with the noble Lord. Why are not the benefits that bus operators and passengers enjoy in London extended to the rest of the country? I hope that when the noble Earl, Lord Attlee, replies he will be able to give us some comfort on this matter. The greenest, most modern buses are not doing the job for which they are designed if they are stuck in traffic. We are not going to persuade people to get out of their cars and on to public transport if that bus is stuck in the same traffic jam as their own cars.

However, it is not all bad news. I hope the noble Earl and my noble friend on the Front Bench will acknowledge that one rarely hears mention of bus passengers in these debates. The noble Lord, Lord Bradshaw, hazarded a guess that not many Ministers travel by bus. I suggest that many Members of your Lordships’ House do so, if only because most of us have reached the age where we get a financial benefit out of doing so.

If one were to ask bus passengers about the standard of service, one might be pleasantly surprised by the reaction. Passenger Focus recently commissioned a nationwide survey of various companies and sought the opinion of bus passengers. I will cite the Go Ahead group survey. I do not think it operates in my part of the world and I have never worked for it, so I cannot be accused of bias. Among more than 3,000 Go Ahead passengers consulted in the survey, there was an 86% satisfaction level. Would any Government of the day receive such satisfaction levels from the populace at large?

Go North-East, a subsidiary of Go Ahead, had an 88% satisfaction level. I mention this because Nexus, the ITA in the north-east, is, I understand, most anxious to introduce a quality contract. Under the terms of the quality contract the ITA will set both fares and standards of service. I do not know whether Nexus or anyone else has asked passengers in the north-east what they think, but if 88% are satisfied with the service currently provided, it is difficult to imagine that local authority involvement would lead to any greater satisfaction. I will be interested to hear the views of both Front Benches on that matter.

Like the noble Lord, Lord Bradshaw, I believe that we should express concern about the price of bus travel, particularly for young people and those seeking employment. All too often Ministers in the present Government—the Chancellor of the Exchequer immediately comes to mind—refer to the unemployed as though somehow it is their fault. When you talk to people who are unemployed—most of us who were in the other place have served the unemployed—the passion, commitment and desire for regular work inspires many of them. However, it is an expensive business to travel to interviews. Only last week a woman told me about going to two interviews here in this city, both of which were held early in the day. That meant she had to pay £10.77 to travel around London because she had to leave during the morning rush hour. Had the interviews been scheduled slightly later in the day, the cost would have been £7-something. For many in your Lordships’ House that £3 would not make much difference, but the unemployed have to decide how best to spend their benefits and it can make a considerable difference.

The Minister will tell me if I am wrong, but I understand that it is possible for people to claim the cost of travel to job interviews. I am told that it is an enormously bureaucratic matter to do so and that it is necessary to jump through all sorts of hoops. Surely the Department for Transport and the department for employment, whatever it is called these days, could sit down and provide some sort of travel voucher for the unemployed to use when they are seeking work. I realise that getting two departments under any Government to discuss financial allocations is the equivalent of the Korean peace talks at Pyongyang, which have lasted for over 50 years, but it ought to be possible to find a less bureaucratic and more humane system than what we have at present.

Unaccountably we have 90 minutes for this debate, but we have been told that we are limited to 10 minutes. Perhaps someone better versed in the rules of your Lordships’ House could explain that, since only four of us are participating. The noble Lord touched on other matters, particularly the distribution of the bus service operators grant. I do not think the Government are aware of the difference between running rural and urban services. The rural bus network is in grave danger of being decimated over the next few years if the changes to BSOG continue. It is an open secret that the Treasury has always regarded BSOG as a subsidy well worth cutting, and having reduced it in the 2011 Budget, there is an intention to actually abolish it before 2015. Such an abolition will lead to the complete decimation of bus services both urban and rural, but particularly in rural areas. It strikes me that the Government will be committing electoral suicide in many areas that are regarded as traditionally Conservative if BSOG is cut further.

I have now exhausted my time. There is some good news about bus service provision, and I hope that my noble friend on the Front Bench will avoid the view—not expressed by passengers—that the simple answer to any problems are quality contracts and reregulation. That is not the view of those who use the bus to get from A to B.

[Lord Rosser]

My Lords, in the light of the comments of the noble Lord, Lord Bradshaw, I am not sure whether I am required as a bus user both in London and outside London to declare an interest in this debate. I also suspect, having listened to the contribution of my noble friend Lord Snape, that there will be little support behind me, at least from those who have spoken, for what I have to say. But, nevertheless, we proceed.

This is neither the best attended debate nor a debate that has attracted a large number of speakers. However, its subject matter is of considerable importance since more people travel by bus than travel by every other form of public transport combined. I am grateful to the Library of the House for the comprehensive and helpful briefing pack it has provided. Before I go any further I would like to thank the noble Lord, Lord Bradshaw, for giving us an opportunity to discuss developments in the bus industry. One development was a Competition Commission report on the industry outside London, which found that what it described as widespread market segregation had occurred as a result of operator behaviour.

However, the bus industry also has much about which it can be pleased. The 2012 bus passenger survey by Passenger Focus, the official passenger watchdog, found that on average 85% of passengers in England, excluding London, were satisfied with their bus journeys. My noble friend Lord Snape, whose advocacy of and support for buses knows no bounds, referred to the survey.

The chairman of Passenger Focus also commented that while overall passenger satisfaction across the surveyed areas was at a consistently high level, bus passengers rated almost all other specific journey factors lower, with wide disparities in ratings of value for money not only between different areas but between different operators and services in the same area.

The Library briefing pack includes a section on the policy of the coalition Government. It points out that the coalition agreement made one mention of bus services when it stated that the Government would,

“encourage joint working between bus operators and local authorities”.

That is a little vague—no doubt because the Conservatives in opposition had proposed regulation and the introduction of quality contracts, whereas the Liberal Democrats stated in their manifesto that they would,

“give councils greater powers to regulate bus services according to community needs, meaning local people get a real say over routes and fares”.

[Lord Snape]

Will my noble friend tell the House how many quality contracts were made during the period of office of the previous Labour Government?

[Lord Rosser]

As I understand it, there were no quality contracts. The legislation was amended in 2008 because the previous legislation has made it an enormous mountain to climb to implement quality contracts. The noble Lord himself made reference to the local transport authorities that are currently seeking to pursue quality contracts in accordance with the legislation.

At Second Reading in the House of Commons of what became the Local Transport Act 2008, the Liberal Democrats said:

“The concept of having partnerships and contracts is right”.—[Official Report, Commons, 26/3/08; col. 220.]

[Lord Rosser]

I note what the noble Lord said, but I am quoting from what his party said in the House of Commons—that the concept of having partnerships and contracts was right. If he is now saying that he does not agree with the statement made by his own party in opposition, of course he is welcome to do so. It is clear that on the issue of contracts, the Conservative Party view has prevailed and the Liberal Democrats have shifted their ground, even though the Minister responsible for the bus industry is a Liberal Democrat.

The bus industry, certainly outside London, is facing a difficult time. The cut in local transport funding of some 28% has led to local authorities cutting back on support for local bus services, and subsidies paid direct to bus companies have also been cut by the Government by one-fifth. In some rural areas, council-supported services make up nearly all the network, yet many of those who use buses have no other means of transport. Cutting a bus route or bus services can cut an opportunity to take up employment or to stay on in education and go to college. That hardly seems consistent with the Government’s declared policy of making it easier to gain skills and take up employment.

We have already set out the significant tranche of cuts to the Department for Transport’s budget that we would have accepted to meet our own commitment to halve the deficit in this Parliament. However, unlike this Government, we would have protected support for local bus services. While the level of financial support from government is very important, it is not the only factor that affects the availability and affordability of local bus services. The ability of local transport authorities to play a role on behalf of passengers, and potential passengers, matters as well.

In government, we legislated to enable transport authorities to, in effect, reregulate buses through the use of quality partnerships, which have led to very successful agreements in some areas, or quality contracts. But the experience of some of the ITAs that have begun to use these powers, particularly in relation to quality contracts, suggests that we did not go far enough. Efforts to introduce quality contracts by integrated transport authorities have been met with specific threats by one of our major national bus companies to close bus depots and sack drivers.

We need measures, which are not currently available, that would provide some protection to enable transport authorities that want to go down the road of quality contracts to do so without facing a long drawn-out and potentially costly process, and even then still face the prospect of being frustrated for no good reason. It should be for the transport authorities, which have a rather wider role and responsibility for the provision of transport within their areas than the bus companies, to decide whether a quality partnership or a quality contract will best deliver their goals and policy objectives on behalf of those whom they represent, and they should not be impeded in achieving either the quality partnership or a quality contract by actions designed to frustrate by either bus companies or indeed government—which I will come on to.

As the recent House of Commons Transport Select Committee report said, in a fairly lengthy but important quote:

“The Quality Contract option is a legitimate one for a local authority to choose. It must also be seen as credible in order to enable the local authorities to apply pressure in cases where competition or partnerships are not working satisfactorily. Local bus operators should not seek to frustrate moves towards a Quality Contract. That no local authority has implemented a Quality Contract more than a decade after the provisions were introduced suggests that there are significant hurdles to overcome, particularly for the first local authority to go down this route. The legislation itself, as amended by the Local Transport Act 2008, seems satisfactory but the process is still lengthy and risky”.

The Select Committee went on to say:

“We recommend that the Government makes the Better Bus Areas funding available, in principle, to support Quality Contracts as well as partnership schemes”.

However, that is precisely what the Government are not doing. The Minister responsible for buses has decided to exclude transport authorities that pursue quality contracts from accessing the Government’s better bus areas fund, to which the Government are implementing the commitment to devolve bus subsidies. The various strands of bus funding should be brought together in a single pot, which could then come under the democratic control of transport authorities.

However, the Government’s decision on access to the better bus areas fund is obviously designed to make it financially difficult, if not impossible, for local transport authorities that wish to go down the road of quality contracts to do so. How can the Government say that they are in favour of devolving powers and yet be prepared to penalise those authorities that decide they wish to pursue tendering, which they are entitled to do under the law? Tendering as an option is not such a radical idea. It is commonplace in much of Europe as well as in London, where a Conservative mayor has not shown any enthusiasm for dismantling the system. In fact, some of the operators opposed to quality contracts in this country are subsidiaries of wider groups that regularly bid for and secure contracts in Europe.

[Lord Snape]

Can my noble friend tell your Lordships’ House whether or not our party is now in favour of the London experience being spread countrywide, and has he cleared such a commitment with the shadow Chancellor?

[Lord Rosser]

I did not say that we are in favour of it being spread countrywide, full stop. What I have said is that it should be up to the transport authorities to decide whether to go down the road of quality partnerships or quality contracts, as they are entitled to under current legislation.

We need to protect the funding for bus services. We also need stronger transport authorities accountable for decisions over fares and services to the communities they serve, and with the confidence to decide freely what kind of relationship they want with bus operators. Unfortunately, the Government have decided to go in exactly the opposite direction.

[Earl Attlee]

My Lords, I am grateful to my noble friend Lord Bradshaw for tabling this debate. The noble Lord, Lord Snape, asked why there is a 10-minute Back-Bench speaking limit. That was a decision of the Procedure Committee approved by your Lordships’ House. It is a shame that there are not more contributors, but perhaps on a Thursday afternoon we can understand why.

[Lord Snape]

Will the Minister then use his enormous influence to see that when there is next a 90-minute debate and there are only a few of us, we can take 90 minutes instead of gabbling through everything in 10?

[Earl Attlee]

My Lords, I can assure the House that noble Lords have been challenging enough in the debate so far without it being extended.

Buses play a vital role in our economy. Sixty-three per cent of all public transport trips are made on local buses, a total of 2.3 billion bus journeys in 2010-11. The bus is essential for many people to get to work and education and to visit doctors and hospitals. For many, the bus is a lifeline and, without it, they would not be able to socialise. More than half of those who rely on the bus outside London do not have access to a car.

As many noble Lords have pointed out, customer satisfaction with their bus journeys is high, with 85% of passengers being satisfied with their service. The under-21s make up a third of bus passengers and use among the over-60s is increasing as a result of the national concessionary pass. A recent study by the University of Leeds has reinforced the importance of buses to a healthy and growing economy. I was grateful to the noble Lord, Lord Snape, for his positive comments about the bus industry.

The Government remain committed to improving bus services, and expenditure on buses reflects this. This year, the Government will spend around £1 billion on the concessionary travel entitlement and £350 million in direct subsidy to bus operators in England. Another £200 million has been allocated to funding major bus projects in the past year, including improvement schemes in Bristol and Manchester.

In March, we provided £70 million through the better bus area fund to deliver improvements in 24 local authorities, £31 million to invest in low-carbon buses and the second instalment of a £20 million package to support community transport. Many bus improvement schemes have also been funded as part of the Government’s £600 million local sustainable transport fund. All this funding demonstrates how important the Government consider bus services to be.

However, the Government also recognise that improvements can and must be made, so earlier this year they outlined their plans for buses in a document entitled, Green Light for Better Buses. The proposals include reforming bus subsidy, improving competition, improving local authority capability in tendering, incentivising partnership working and multi-operator ticketing, and making bus information and ticketing easier to access for all, particularly young people. Here, I pay tribute to the work of my honourable friend Mr Norman Baker, a Minister who is absolutely committed to public transport.

There is no doubt that we are operating in challenging economic times, and this is no different for bus operators. The Government want to ensure that the bus market is still attractive to operators, both large and small, by ensuring that funding is allocated in the fairest way while giving the best value for money to taxpayers. However, we recognise the problems that are experienced by smaller operators.

The Government have recently launched a consultation on the future of the bus service operators’ grant, which is paid to bus operators—I shall say more about this in a moment. The grant is currently paid direct to bus operators in a fairly blunt and untargeted way that is related to fuel consumption. Some local authorities have told us that they can make the bus subsidy deliver better value for money by working in partnership with their bus operators to grow the bus market. That is what the better bus areas are intended to do, and the available top-up fund will give them an additional incentive to innovate.

The better bus area policy relies strongly on partnership with commercial bus operators rather than on contractual relationships. Thus, better bus areas are quite distinct from quality contract schemes where all bus services would be tendered and the bus service operators’ grant automatically devolved to local authorities. The characteristics of local bus markets vary, so different solutions will be appropriate in different local areas. The Government believe that it is for local authorities to decide which route they should pursue.

The Government are committed to protecting the national bus travel concession, which is of huge benefit to around 11 million people, allowing free off-peak travel anywhere in England. This generous concession provides older and disabled people with greater freedom, independence and a lifeline to their community. It enables access to facilities in and beyond their local area and helps these people to keep in touch with family and friends. It can also bring benefits to the wider economy.

There is no statutory obligation to provide discounted-price travel to young people but many commercial and publicly funded reductions are available. I have been encouraged to see that in Norfolk, prompted by the council’s successful bid to the better bus area fund last year, several local bus operators are working in partnership with the county council to introduce a reduced bus fare for 16 to 19 year-olds. I welcome this initiative and hope to see more like it.

I will try to answer as many questions as possible. Obviously, I will write where I am unable to do so. Both the noble Lord, Lord Snape, and my noble friend Lord Bradshaw asked me about the Traffic Management Act. Local councils and TfL already have powers to enforce moving traffic conventions, including bus lanes, cycle lanes, yellow box junctions, “no U-turns” and “no entry” signs, et cetera. Authorities outside London that have taken civil enforcement powers can enforce moving traffic conventions in bus lanes. Over 80% of authorities already have these powers. The Government support the remainder taking those powers on.

We recognise that there is a strong desire from some local authorities outside London to have all the extra powers in Part 6 of the Traffic Management Act to enforce all types of moving traffic offences, as those in London do. We are considering this, but Ministers want to be sure of the traffic benefits of extending these powers outside London and have therefore written to Nottingham and Sheffield as part of the city deals process, proposing some projects to analyse the traffic benefits of implanting Part 6 in these regions.

The noble Lord, Lord Rosser, asked about funding a quality contract through a better bus area. Areas intending to pursue a quality contract scheme may also choose to pursue a better bus area. However, we would need to understand how this would work, both with and without a quality contract. Moreover, BBAs are strongly based on a consensual approach with bus operators. Again, we need to understand how this would work in a quality contract area where the bus operators could easily change. This is a consultation and we are interested to know whether and how this could work.

My noble friend Lord Bradshaw talked about the cost of bus fares and suggested that they are too high and rising. Overall, fares were the same level in March 2011 as in March 2010, with a 2% decrease in non-metropolitan areas and increases of 0.9% in metropolitan areas and 1.4% in London. Across the country, fares can be quite variable, with a wide range of ticket types.

The noble Lord, Lord Snape, talked about the problems of young people and high fares. Of course, bus fares can be a high proportion of a young person’s income. The noble Lord talked about the problems of job hunting and suggested that we needed a simpler process for young unemployed people to claim their travel expenses. The Department for Work and Pensions provides a range of support with travel costs for the unemployed through Jobcentre Plus, which is best placed to decide who needs support with transport costs.

My noble friend Lord Bradshaw asked what was being done to reduce antisocial behaviour on public transport. I recently experienced an extremely distressing incident on a train, so I know how much of a problem this is. A wide variety of people and organisations are involved in helping to reduce antisocial behaviour and to deal with it when it occurs. These may be transport operators, local authorities, local police and PTEs, Transport for London, town centre managers, and many others. They may deliver measures in partnership with or through others, such as voluntary organisations.

The department has convened a public transport crime liaison group, chaired by my honourable friend Norman Baker, bringing together passenger representative groups, police, local authorities and operators to hear about their work on reducing crime and to share best practice. I recognise that this is a serious problem.

My noble friend Lord Bradshaw talked about the problem of increased fuel prices of 58% due to the decrease in BSOG. We are determined to bring down the deficit. BSOG must help to achieve that, and the 20% reduction did just that. We are now looking at making the remaining BSOG more efficient.

[Lord Snape]

How much has the deficit been increased or reduced by freezing fuel duty for motorists generally?

[Earl Attlee]

That is a rather wider question, and I would be delighted to write to the noble Lord on that.

My noble friend Lord Bradshaw talked about ring-fencing BSOG. It is vital that local authorities have flexibility to use funds to best effect. However, it is also important not to get turbulence in the bus market when changes take place as we reform the BSOG, so we will ring-fence BSOG for tendered buses for a transitional period.

The noble Lord, Lord Snape, asked about BSOG in rural areas. There are no plans to cut BSOG total. BSOG for tendered services will be devolved to local transport authorities. There are lots of them in rural areas, and therefore more flexibility for local authorities best to support bus services as they see fit. Commercial BSOG outside BBAs will remain the same for now, but how we apply it will be reviewed later.

My noble friend Lord Bradshaw asked how much the Competition Commission inquiry cost the taxpayer. I do not have the figure to hand, but I will write to him. He also asked about better bus area bids excluding population areas under 100,000. We have yet to issue guidance on the criteria for designating BBAs for devolved BSOG. However, we will be looking for proposals that can help to grow the economy and reduce carbon emissions. BBA 2012 was mainly aimed at large urban areas as being more able to meet the criteria.

The final point that I can address is whether there is any incentive for better bus speeds to take driver management systems, such as RIBAS, into account when bus systems are assessed. The criteria against which better bus area bids were judged included reduction in carbon emissions, which indirectly would offer a potential incentive for operators to use driver management systems such as RIBAS, given their positive impact on fuel efficiency and carbon emissions. The long-term goal of decoupling bus subsidy from fuel consumption will incentivise greater fuel efficiency within bus service operator fleets, which, in turn, should incentivise the use of driver management systems.