Bus Services

Louise Ellman Excerpts

Thursday 1st December 2011 Westminster Hall

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

Buses are the most popular form of public transport in this country. There were 4.6 billion bus passenger journeys in England in 2009-10, compared with 1.3 billion rail journeys, yet buses rarely attract high-profile attention. In part that is because central Government do not take as close an interest in buses as they do in rail travel, but I suspect another reason. Outside London, buses are disproportionately used by older and less well-off people who, regrettably, do not attract the same attention as rail travellers. However, buses are vital, connecting people with town centres, jobs, colleges, shopping, family and friends, and when bus services are cut, people’s lives are badly affected.

Last year’s spending review included three decisions with significant implications for bus services in England; nearly half of bus operating revenue comes from public sources, so any reductions from such sources are highly relevant. First, support for local authorities overall was cut by 28% and funding for local buses was no longer ring-fenced. That affects those services paid for by local authorities for social reasons, or about 20% of services overall, although that figure varies from place to place. The TAS Partnership estimated that that will eventually reduce the subsidies available to bus services by £125 million. By February, local authorities had confirmed an overall reduction of £44 million for 2011-12.

Secondly, changes in the formula for concessionary travel reimbursement have taken about £100 million away from local authorities. Concessionary travel reimbursement is claimed to be provided on a “no better off, no worse off” basis, and the formula changes are intended to iron out teething problems found during the introduction of the scheme under the previous Government.

Thirdly, the Government announced a 20% reduction in the bus service operators grant, a form of fuel duty rebate, to take effect from April 2012. That will affect all bus services, commercial as well as subsidised, and is estimated to remove around £60 million from the industry. I should add that the increased cost of diesel has also put up bus operators’ costs and, inevitably, will have put pressure on services.

The total reduction in revenue for the English bus industry, outside London which has rather different arrangements and which we did not consider in our investigation, is likely to be between £200 million and £300 million per annum. By June 2011, 70% of English local authorities had decided to reduce funding for supported bus services, which affected some urban as well as rural services. Some authorities, such as those of Hartlepool and Cambridgeshire announced that they would cut some of their subsidised services altogether.

Our inquiry took place in the first half of this year, and we published our report in August. We wanted to find out what the effect of the spending review changes was likely to be and to consider how it could be ameliorated. We were particularly keen to hear the views of bus users and took specific measures to find out exactly what was happening to them. Working with the excellent parliamentary outreach service, we distributed leaflets about our inquiry in libraries and citizens advice bureaux in areas that we knew to be most affected by cuts in services. We used parliamentary petitions to identify bus service campaigners in particular areas. We also took oral evidence from a panel of bus users, and that evidence brought home to the Committee and to the public the practical implications of cuts in essential services. We received a great deal of correspondence and evidence about the impact of bus cuts on people’s lives, from all sources, including letters from disabled people and senior citizens, telling us about their experiences and how cuts in services meant that they could no longer socialise with friends and families. We heard from students who had had to leave their college courses because they could no longer get to college on time and, after we had published our report, I met members of the Liverpool Schools’ Parliament who reinforced that point. They spoke about the impact of cuts in local bus services on the accessibility of school and college to them. Time and again, the letters and all the correspondence, petitions and personal representations showed why bus services matter and should not be left to market forces.

Our main conclusion was that the combined impact of the three spending review changes to bus funding posed the greatest financial challenge to the industry for a generation. We were not convinced that the Government had a full understanding of the impact of the funding changes on subsidised and commercial services, and we recommended that they should co-ordinate the collation of information about changes to subsidised services. I am pleased that the Government agreed with that recommendation, and they are now working on it with the Association of Transport Coordinating Officers. Can the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), tell us when that information will be ready, so that we can monitor how the provision of subsidised bus services is changing throughout the country? Has the Minister been in touch with local authorities about their plans for subsidised services in 2012-13? It is not solely about local authorities, however; how is the commercial sector responding? What information has been received about the likelihood of further cuts? Many hon. Members know from their constituency work that local bus services, commercial as well as subsidised, are being reduced.

The Government have stated that they hope that communities, operators and local authorities can work together to improve local bus services. I certainly agree with that aim, but will it actually happen? The Committee recommended that the Government should identify the barriers to co-ordinating different types of transport services. Does the Minister agree that the Department should do so, and report on what progress has been made?

We looked at the possibility of community transport schemes playing a greater role in delivering local bus services. The Government are considering ways of making such services more commercially viable, but it is unclear how that consideration is progressing. I was disappointed that one option for expanding community transport, by allowing people to use their concessionary fare passes on community transport, was rejected. The Government clearly want to see community transport expand, and the Committee welcomed their new fund in support of that, in particular in rural areas, but they do not seem to be resolving what is a mounting problem. Perhaps the Minister could clarify the Government strategy.

I am also worried that the changes to the bus service operators grant, which are due to be introduced next spring, will hit both subsidised and commercial bus services hard. At the time of our inquiry, the Minister’s view was that operators would be able to absorb most of the changes. The bus industry has challenged that view, and I would be interested to hear the Government’s assessment of the impact of reducing BSOG to bus services next year.

[Mr Hugh Bayley in the Chair]

The Government are reviewing BSOG to see whether it can be delivered in a different way—for example, by paying it to local authorities instead of to bus operators. I would be interested to hear the Government’s thinking on that. It is important that the money provided by the Government is earmarked for local bus services. That must be achieved, whatever means are adopted.

One theme that emerged from the public’s evidence was that consultation on changes to bus services is often inadequate. There were examples of good practice, but passengers were sometimes not asked about changes, or were consulted on only one option. That is not good enough, especially when considering how important bus services are to their users. The Committee recommended that Passenger Focus should develop a consultation toolkit for local authorities to use when proposing changes to subsidised services, and the Government agreed. What progress has been made? Is the toolkit ready, and will the Department monitor how it is used, and encourage local authorities to follow best practice?

The need for proper consultation does not rest solely with local authorities and the integrated transport authorities. Private bus operators also have responsibilities, and they should encourage customer feedback about services, and consult on changes before they are registered with the traffic commissioners. Hon. Members will know from their constituency work how worried people become about abrupt changes to service provision, including those from commercial operators. We need better notice, better consultation, and more involvement from bus users. If there are financial difficulties—the public are certainly aware that there are financial difficulties in almost every public service—the users of the service often have ideas for how to make best use of available resources. It would be good to see more consultation with local people before decisions are made.

In their response to our report, the Government seemed to be sympathetic to that argument, but said that they wanted to reflect on the Competition Commission’s proposals before reaching a view. The commission’s role in looking at the future pattern of bus services will be extremely important. It has been examining the competitiveness of the bus market since the beginning of last year. Consequently, we did not examine that issue, or consider in depth how legislation on quality partnerships and contracts has been used. However, we recommended that local authorities and integrated transport authorities should use the provisions in the Local Transport Act 2008 to achieve better partnership working, and I am pleased that the Government agreed.

The Competition Commission’s findings are due to be published this month, but there has already been a lot of discussion about whether they will make a significant difference to the transport market, and specifically the bus market. Some of the information published about bus companies’ strategies in places such as the north-east does not suggest that competition is working effectively. There seems to be a reluctance to tackle that by using quality contracts, or franchising. I note that Tyne and Wear transport authority is actively considering a quality contract approach. It would be helpful to know whether the Government are taking an interest in that, and examining barriers in authorities that want to agree quality contracts. If there are barriers, they should be addressed, and I hope that the Government are taking an interest in that. The Select Committee will consider the Competition Commission’s report when it is published, and I expect that we will return to this issue in the new year.

I want to finish by referring to the concessionary fare scheme, which enables free local transport throughout the country. It was one of the biggest successes of the previous Government’s transport policy. I congratulate the Minister on ensuring that it was not a victim of the spending review, which was significant. Passenger Focus found that 39% of older bus pass holders made a greater number of local journeys by bus than before they obtained their passes. That resulted in more social inclusion, and enabled them to be more active than would otherwise have been the case. The importance of transport includes health implications, and one area that health authorities have identified is that it is important for older people to maintain an active life for good health. The concessionary free pass is a major factor in achieving that.

When we examined how the concessionary pass scheme was working, we concluded that to inform development of future policy, data are required on how it is working, who uses it most, and who finds it most beneficial. In their response, the Government did not seem to accept that, and perhaps the Minister will reconsider. The scheme is highly valued, and we think there may be scope for smart ticketing to reduce its cost.

Our inquiry shone a light on how the spending review is affecting a crucial but often under-appreciated and under-reported part of our transport network. We engaged with the public in innovative ways to publicise why buses matter, and to ensure that we have the best possible information from people who are dependent on buses. We are worried about the impact of the cuts that have taken place and those to come. The outcome of the Competition Commission’s work, and how the Government respond to it, will be crucial to development of the bus industry—bus services for passengers—over the next few years. The Committee will continue to pay close attention to bus services, and I anticipate questioning the Minister on that in the Committee in the not-too-distant future.

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[Mrs Ellman]

I thank Members for their constructive contributions, which I hope will help us to improve bus services. I also thank the members of my Committee, who today displayed the enthusiasm, commitment and knowledge that has helped to make this report effective. It will be even more effective if it changes the situation, as I hope it will. Buses matter and my Committee intends to continue to attach to them the importance that they deserve.

Question put and agreed to.