Rural Bus Services

Norman Baker Excerpts

Tuesday 11th October 2011 Westminster Hall

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I think the hon. Gentleman means three parties.

Mr Scott, it is good to see you in the Chair, given your transport expertise. We are delighted to have you here. I thank the hon. Member for Great Yarmouth (Brandon Lewis), my coalition colleague, for raising the issue of rural bus services and securing time to allow us to debate these important issues. There has been a very good turnout. I welcome that. It is helpful for Members of Parliament to make it clear that they do value bus services and, in particular, rural bus services. The tone of the debate has been positive and constructive. Hon. Members made a number of very good points, which I will try to respond to in the time available.

I know from my own constituency that buses are a lifeline for many people in rural areas, providing access to jobs, schools, health care and social activities. Good bus services contribute to both the Government’s key transport priorities: creating growth and cutting carbon. By providing an attractive alternative to the car, we can not only cut carbon but, at the same time, unclog the congestion that can choke off local economies. That applies particularly to towns.

We are committed to reducing the budget deficit, as has been said and as hon. Members have accepted across the Chamber today. Every sector has to play its part. The shadow Minister, the hon. Member for Barrow and Furness (John Woodcock), will remember that the Labour party was committed to £44 billion of cuts as well. We must recognise that every sector has to play its part. However, we have a duty to pay particular attention to those who are most reliant on buses, such as the people referred to by the hon. Member for South West Durham—

[Pat Glass]

North West Durham.

[Norman Baker]

North West Durham. Well, I am sure that there are some people in south-west Durham with similar issues.

Central to all this is our commitment, as part of the comprehensive spending review, to continue our financial subsidy of bus operators. Bus service operators grant remains untouched for this financial year. Notice of 18 months or thereabouts was given of the changes. The 20% savings are to be introduced from next April. That 20% reduction represents a good deal for bus operators and passengers when compared with reductions to budgets elsewhere. Although it will inevitably have some effect on fares and services, I have been assured by operators that that will be only at the margins. Indeed, after the spending review decision was announced, the industry said that it felt able to absorb the reduction in bus service operators grant without raising fares or cutting services.

[Pat Glass]

With respect, we are not talking about the change to bus service operators grant. That is yet to come. We are talking about the impact of the cuts to local authority budgets. The situation is bad enough, but next year it will get far worse with the change to bus service operators grant.

[Norman Baker]

If I am allowed to make some progress, I will of course address that point. I am trying to structure my response. The hon. Member for Great Yarmouth, whose debate it is, referred to these issues: bus service operators grant, local tendered services, support from local authorities and concessionary fares. I will deal with each of those. The point that I am making on the first one is that it is not an issue that should concern hon. Members, because the bus operators themselves have said that the reduction can be absorbed. Therefore, BSOG is not a problem in terms of the services provided.

[John Woodcock]

Just to be clear, is the Minister saying that he is clear that there will be no further reductions in services as a result of the reduction in BSOG next year?

--- Later in debate ---

[Norman Baker]

I am saying what I was told by the Confederation of Passenger Transport. Immediately after the spending review, it indicated that in general terms it felt able to absorb the reduction in BSOG without an effect on services or fares. That is what it said. I am happy to provide the quote if the hon. Gentleman wants to see it.

It should also be recognised that, even in places such as Norfolk, about two thirds of journeys are on commercial services and are therefore unaffected by what local authorities decide in relation to their own budgets.

Let me turn now to concessionary travel and say first very plainly that, even in these times of austerity measures, the coalition Government are firmly committed to protecting the concessionary bus travel scheme. That was made clear in the coalition agreement, and the Chancellor of the Exchequer reconfirmed that commitment in the spending review. The scheme is of huge benefit to about 11.5 million people, allowing free off-peak travel anywhere in England. That generous concession provides older and disabled people with greater freedom, independence and a lifeline to their community. It enables access to facilities both within and outside their local area and helps them to keep in touch with family and friends. Travel to visit popular tourist destinations can also bring benefits to the wider economy.

The Government are aware of how precious the benefit is to older and disabled people, which is why we are focusing our efforts on assisting local authorities to find efficiencies through reforms to administrative arrangements for the scheme, rather than cutting back on the entitlement. For the avoidance of doubt, the free bus pass is here to stay.

[Mr Andrew Turner]

My hon. Friend is quite correct in what he quotes. I fell into the bear trap that the Labour party left for me, and so did my right hon. Friend the Prime Minister, as far as I can see.

[Mr Turner]

I was wrong to support the scheme, but I supported it and I will support it for the rest of this Parliament. What happens then is a matter that we will have to debate and develop.

[Norman Baker]

I can say to my hon. Friend to be helpful that a number of well-meaning people who are very committed to bus services have raised similar points to the one that he has raised. Those points have been noted and passed both to the Department for Transport and elsewhere in Government. However, we are clear about the commitment that we have made to the free bus pass, and that is not going to change.

I should at this stage pick up a point made by the hon. Member for Great Yarmouth about trying to save money on administration in relation to the bus pass. That is right. We need to consider those types of saving. That is one reason why we were supportive of the idea of moving the administration from districts to counties, which saves considerable costs in the administration of the bus pass.

Only one small change has been made to the entitlement to concessionary fares: the age of eligibility has been increased in line with the changes taking place to the state pension age. That is right, as people are living longer, staying healthy longer and tending to stay in work until later in life. That change started in April 2010, just before the last general election, so local authorities are already making savings as a result. The change will assist with the financial sustainability of the scheme, while reserving the benefits of the bus pass for those with the greater need.

What has not changed at all—this is an important point—is that operators should be reimbursed for concessionary bus travel only on a no better, no worse-off basis. That is in primary legislation introduced by the previous Government. Nothing that this Government have done has changed that at all. Almost a year ago, the Department for Transport published revised guidance to local authorities to support them in determining their arrangements with bus companies, to make sure that they are no better and no worse off. I made that clear in my recent letter to the hon. Member for North West Norfolk (Mr Bellingham) and my hon. Friend the Member for North Norfolk (Norman Lamb), both of whom came to see me to talk about bus services in the county.

In a report published in May, the Competition Commission strongly commended the guidance issued by my Department, since it helps local authorities to take account of the impacts that the concessionary travel scheme can have on commercial pricing policies. The commission says that it hopes that the guidance will be followed to the greatest extent possible. In fact, the majority of local authorities are now using the guidance and should be reaping the financial benefits of taking it on board. I stress, however, that it is entirely a matter for them whether they use the guidance or not. There is no compulsion to do so. The only compulsion is the one that existed in legislation introduced by the previous Government to ensure that bus companies are no better and no worse off from operating the concessionary fares scheme. The guidance can be a useful starting point for negotiation between bus operators and local authorities and, so far this year, more than half of the appeals lodged by operators have been withdrawn—a significant improvement on previous years.

I remind Members that our funding for bus travel does not stop at concessionary travel reimbursement and bus operator subsidy. We have also provided almost £47 million to local transport authorities and bus operators to purchase 542 low-carbon buses across England, through our green bus fund. I would also like to refer to our new £560 million local sustainable transport fund, which this Government have introduced. There have been 39 successful bids in tranche 1, 25 of which have included bus-based elements to help bus travel locally.

Turning to the third element, I recognise that the recent local authority settlement has been challenging. There is no doubt about that. I have heard the argument that the distribution method used at the time does not reflect the particular circumstances facing each local council. That has been brought into sharp relief now that, since April, all funding for the statutory concessionary travel scheme has been provided as part of the settlement from the Department for Communities and Local Government. I should point out, however, that last summer’s consultation by that Department provided an opportunity to influence the final distribution method for the first two years of the spending review period. The overall funding then set was deemed by DCLG to be sufficient to enable local authorities to deliver effective local services, while ensuring that authorities do not set excessive council tax increases. Councils now have another opportunity to make their voices heard. DCLG is consulting on the broad options for a new way of funding local government, based on business rates retention.

The Government are clear that any changes must protect the interests of local taxpayers and the vulnerable, be fair for all councils and encourage growth. Councils that are more deprived—I accept the point that has been made about the definition of deprivation—will continue to receive central Government support. We recognise, however, that it may be possible to improve the way local council spending on concessionary travel reimbursement is treated in allocating local government resources. That is why, following my meeting in April with the hon. Member for Great Yarmouth, my hon. Friend the Member for North Norfolk, the hon. Member for Broadland (Mr Simpson), my hon. Friend the Member for Norwich South (Simon Wright), and the hon. Members for South West Norfolk (Elizabeth Truss) and for Mid Norfolk (George Freeman), I wrote to the Minister for Housing and Local Government on 20 July about the way formula grant is calculated, the relative needs formula for concessionary travel, the so-called floor-damping mechanism, and the local government resource review. That is why the consultation considers whether to review the relative needs formulae for concessionary travel when establishing the baseline for local government funding from 2013-14 onwards.

[Sarah Newton]

I welcome the review of local government funding formulae. One area of reimbursement that the Minister has not mentioned, and on which I hope he will give an assurance, relates to parts of the country that welcome lots of tourists but are not, at the moment, reimbursed for the cost of honouring concessionary fares. Can he assure us that the review will consider that?

[Norman Baker]

I can give an assurance only that, first, that point was made to me in a meeting with Norfolk MPs, and secondly, that it has been reflected in comments that I have passed on to DCLG. I am happy to share the reply that I received from the Minister for Housing and Local Government. He confirmed that he had received the letter and that, in his view, the new business rate retention system is likely to address Norfolk’s concerns. That was the official response from DCLG and the Minister thinks that that is part of the answer. There is recognition, at least, from DCLG that Members in Norfolk have a legitimate concern about the matter, and it is therefore being factored, I think, into the Department’s thinking.

Let me now turn to reductions in tendered bus services, which in England comprise about 22% of bus services, while the rest are commercially provided. As I have said, the recent local government finance settlement has been challenging, but I am still disappointed that in some areas local councils have responded by taking the axe to local bus services in a rather unimaginative way. This hits particularly hard in rural areas where supported services make up a higher share of the total than in metropolitan areas. I am naturally concerned when I hear that vulnerable people with few other transport choices have lost their only bus service, or that children have reduced public transport access to the school of their choice. It would seem that there is also an impact on people’s love lives and on cats, but perhaps I should keep away from cats.

Some councils, such as Cambridgeshire, have unfortunately taken an almost slash-and-burn approach to bus services, while others, such as East Riding, where the percentage cuts are in single figures, have been much more considerate and careful in their decisions. There is therefore a big difference—this is part of localism—between the responses of individual councils. People are now empowered to ask why their council has made cuts in their area when similar cuts have not been made across the border. I hope that people will start picking up on these differences and challenge their councillors accordingly. That is part of the answer to the point that the hon. Member for Skipton and Ripon (Julian Smith) made about North Yorkshire, because the position in North Yorkshire is very different from that in, for example, East Riding.

I was encouraged to read in a recent press release by Norfolk council that it has been able to make significant savings this year with

“very little disruption to bus services.”

Another example is Dorset, which I understand is making savings of up to £1 million this year through an innovative procurement model. That is something that I am examining to see whether there are lessons that can be rolled out to other councils throughout the country.

I am interested in the point made by the hon. Member for South Derbyshire (Heather Wheeler) about feeder services in Shropshire. Section 22 community transport services can qualify for concessionary travel, so it is possible for them to be included in a proper arrangement for a planned bus network.

I am also keen that local authorities make the most efficient use of their resources, whether that means combining adult social care transport with patient and school transport, or providing more flexible forms of public transport in areas where commercial services are not available. In Cheltenham, for example, Gloucestershire county council has replaced a costly subsidised bus service with a route operated by a community transport group, which integrates school transport in the mornings and afternoons with a scheduled timetable open to the public in between. I think that that is the sort of initiative that the hon. Member for Great Yarmouth was suggesting might be applied more widely.

On community transport eligibility, as I have mentioned, section 22 services qualify. Section 19 services do not, because the Department has long held the view that, because they are on-demand services and available only to specific groups of people, it would not be fair to extend concessionary fare eligibility to them. It could also undermine existing tendered or commercial services. They qualify, however, for bus service operators grants, so there is support.

I am conscious of the time, but let me pick up one or two of the points that have been raised. The hon. Member for Hexham (Guy Opperman) made a point about integration across counties. Local authorities have powers to work together with operators of commercial services across boundaries to integrate timetables. That is done in some areas, such as Oxford and Sheffield, so the powers are there and were, in fact, reinforced in the Local Transport Act 2008. It is up to local authorities to use the powers that they have. There are no quality contracts in place at the moment. The legislation exists to allow them to be formed. There are statutory quality partnerships, which is perhaps what the hon. Member for Barrow and Furness was discussing. If local authorities want to avail themselves of the powers in the 2008 Act, they can do so. Some of the legislation is slightly complicated. In fact, when I was in opposition, I wanted to go further, in line with some of the comments made by Government Members during today’s debate, but that did not find favour with the previous Government.

The Competition Commission has produced this week its provisional remedies for the bus market. The Department for Transport may need to look at those carefully. Perhaps some solutions will help to address some of the issues that have been raised today. The hon. Member for Hexham talked about more council control, which is what the Competition Commission is suggesting, particularly in terms of multi-operator ticketing.

The hon. Member for South West Norfolk raised the issue of rail-bus integration.

[Mr Lee Scott (in the Chair)]

Order. It is now time for the next debate.