Bus Services

Norman Baker Excerpts

Thursday 1st December 2011 Westminster Hall

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

Thank you, Mr Bayley, for calling me to speak. As always, I will do my best to respond to the various points that have been made.

Let me begin by congratulating and thanking the hon. Member for Liverpool, Riverside (Mrs Ellman), the Chairman of the Transport Committee, both for her Committee’s report into this very important subject and the measured way in which she presented the report’s findings. Buses are the predominant form of public transport and they are used disproportionately highly by those on lower incomes, so it is quite right that the Committee should look at them seriously, as it has, and come forward with its thoughts and recommendations.

As we set out in our response to the Committee’s report, “Bus Services after the Spending Review”, the Government place a great deal of value on local bus services. We recognise the important role they play in people’s lives and in the wider economy. We have put significant funds into ensuring that services can continue to operate across the country, whether that is by retaining the bus service operators’ grant in full for this financial year, or by reiterating and maintaining our commitment to the concessionary travel entitlement for older and disabled people. In addition, the local sustainable transport fund was established, providing more funds for sustainable transport over a four-year period than the previous Government provided. In tranche 1, £155 million was handed out and 35 of the 39 successful bids included bus-related elements.

However, we recognise that more needs to be done, which is why I announced at the UK bus awards on Tuesday a further £25 million of capital funding for buses. The previous two tranches of the green bus fund have been a success story, paying for more than 500 new low-carbon buses. The Government are now committing another £20 million for the third tranche of the green bus fund, to ensure that carbon emissions from buses continue to fall. I am sure that the industry will confirm, as it has to me, that when people are presented with new clean buses they find them more attractive, which means there are more people who want to use them. I announced earlier this week that, with the Mayor of London, we are committing £10 million to reducing emissions from London’s buses and improving air quality in the capital. We continue to support bus manufacturers and operators, to promote jobs across the UK in companies that can supply clean vehicle technology. I was pleased to be able recently to open the new Optare factory, which is a vote of confidence by British bus manufacturers in the future of bus use in this country.

The issue of community transport was raised by the Chairman of the Select Committee and by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), and I shall deal in particular with the point about where it fits in the system. As the hon. Lady will have heard this morning, community transport has a viable role in a number of ways. It helps to provide door-to-door transport for people who would otherwise not have any transport at all, and it helps with moving groups around in a way that commercial services would not be able to deal with—for example, children or young adults who want to go from A to B when there is no bus running, or old people who want to get to the cinema for a day out. It also provides bus services where there is no case for a commercial service, and probably no case for a supported service either. The community transport sector is very important and I want it to prosper and grow, which is one of the reasons why in March I announced £10 million to kick-start growth in the sector. The evidence is that local councils have welcomed the funding and are using it, by and large, productively. I accept that there is more to be done, and I hope to be able to say something even more positive in the next few days.

My hon. Friend the Member for Blackpool North and Cleveleys has put an interesting case, promoting his view of life with section 19 and the concessionary fare arrangements, and the report’s recommendations show that the Committee shares that view. There are three issues about section 19 and about why it would not be right at this point to extend the concessionary fare arrangements. One issue is simply cost. We have protected in its entirety the entitlement element of the concessionary fare arrangements. We have not gone back at all from the previous Government’s legislation. To extend the arrangements further would incur extra cost, at a time of financial difficulties for local government and the Government nationally.

Secondly, I know that my hon. Friend wants to approach the matter from the other end, but there is a point of principle about whether a concessionary fares system should be provided for services that are essentially available only to members of a group, and I am not sure that it should.

The third issue is that there is a consequence for existing bus services, particularly supported ones in rural areas, which are probably among those nearest the mark on viability, even when supported by local councils. If we were to see a significant number of people changing to community transport because of the incentive provided, existing bus services could be fatally undermined and the situation made worse. I am hesitant, therefore, to extend the arrangements as my hon. Friend has suggested, but he has made some fair points to forward his case.

The Committee has asked that we monitor the impacts of any changes made by local authorities or operators. We will do that, in conjunction with our partners in industry and with local government. The Campaign for Better Transport has recently collated figures on reductions in budgets and services, which has been useful. We recognise the importance of monitoring trends over time, and that is why we publish annual bus statistics and run a national travel survey, which will continue. But this has to be done properly. Robust data take time to collate, corroborate, clean up and publish. We continue to receive information, which we use as it comes in, but we want an accurate picture once a year.

The Department for Transport recently published the 2010-11 annual bus statistics, which show that compared with the previous year the number of bus passenger journeys in England rose slightly, bus vehicle mileage increased by a similar amount, and bus fares remained the same in real terms. That is a slightly different picture from the one presented to us this afternoon. Figures for 2011-12 will be available next year, but in the meantime there is no doubt that in some areas of the country a combination of the difficult macro-economic climate, local authority bus cuts, and operator decisions is making life more difficult for people who need to travel by bus. I do not want to shy away from that, but the national picture is more mixed. As my hon. Friend the Member for Milton Keynes South (Iain Stewart) mentioned, in many places local councils are taking positive steps to ensure that better services are provided more cost-effectively and more efficiently, and I would like to give some examples of that.

The first comes from Dorset, which I have mentioned in previous debates. Dorset is one of England’s most rural counties, so commercial services are limited to the main towns, and for non-commercial services contract prices have been rising. A further problem the council faced was that there were more than 700 different contracts for passenger transport services with, including taxi firms, about 300 operators. The contracts covered the full range of council services, from adult social care to school transport. By combining budgets and staff in a single integrated transport unit, and by working in partnership with local operators, the county council has managed to make significant savings while introducing new, longer-term contracts that offer stability for operators, and secure patronage and revenue information for the council. There were some teething problems, and people who pay attention to such matters will have seen mention of them in the local transport press, but the council has saved large amounts of money and managed significantly to minimise cuts. There are lessons to be learned from Dorset. The council has made annual savings of up to £1 million on contracts for school and tendered bus services, and it has opened up the local bus market to new operators, which has the potential to kick-start competition for commercial services.

The second example comes from Bedford. Despite financial constraints, Bedford borough council has been able to improve bus service provision in rural areas. This has included new and restored routes, increased frequencies and free travel for under-16s at weekends and during school holidays. This was made possible simply by negotiating closely with local bus operators and consulting extensively with local communities, the sort of measures that my hon. Friend the Member for Milton Keynes South advocated in his contribution. In both these examples, new approaches to procuring bus service contracts have resulted in new entrants into local bus markets, which the Competition Commission identified in its provisional findings as vital to making the markets more competitive and providing a better deal for passengers and local taxpayers.

A third example comes from the Isle of Wight. In September, Isle of Wight council and the local bus operator, Southern Vectis, developed an innovative community transport scheme. Local groups provide volunteer drivers to operate rural routes that feed into the main bus network on the island. The drivers are fully trained by the operator, which also provides the vehicles and fulfils the regulatory and maintenance requirements. This partnership has brought community transport and the resources of a private sector bus company together for the first time. It is a very interesting model. I am greatly encouraged that councils, operators and residents can come together when budgets are tight to develop a rural bus network that suits their local needs. It is exactly the sort of scheme that the community transport fund I announced in March is designed to encourage.

[Paul Maynard]

Will the Minister confirm that it is interesting to note that the National Union of Rail, Maritime and Transport Workers was fully behind the scheme in the Isle of Wight?

[Norman Baker]

It is important to note that. That is a very relevant point and it leads me on, perhaps, to the points made by the hon. Member for Hartlepool (Mr Wright). I am sorry that, unlike the Chairman of the Committee, who presented matters fairly and equitably, albeit in a challenging way, he sought to present matters as something of a party political rant. He was keen to say that this was the Government’s fault, but the Government have not cut bus services in Hartlepool—his local council has. Councils up and down the country have not been cutting bus services, and if all the services in Hartlepool have disappeared he needs to take the matter up with his local operator and council.

The picture varies enormously across the country. I am not pretending that it is easy for local councils; it is perfectly true that there are challenges as a consequence of the local government settlement. Cuts have been made across the country in local bus services, particularly in supported ones. The Opposition spokesman, the hon. Member for Barrow and Furness (John Woodcock) said, I think, that the Campaign for Better Transport had found that three quarters of local authorities were cutting back on buses. That is unwelcome, but the fact remains that a quarter are not cutting back at all. Perhaps we should look at them for lessons on how they have managed to maintain their bus services rather than cutting everything in sight, which appears to have happened in Hartlepool.

[Julie Hilling]

Perhaps one of the things that should be considered is the level of cuts made to those local authorities. We know that the same cuts have not been made everywhere, and that some local authorities, particularly those in the north-west, north-east and other areas, have had far greater cuts than some authorities in the south, which have had much less stringent budgetary cuts.

[Norman Baker]

The hon. Lady will appreciate that I am not responsible for how the Department for Communities and Local Government has distributed its money, and I cannot comment on that in detail. What I would say, having looked at bus patterns across the country, is that it is not the case that southern counties have maintained their bus services while northern ones have not. The picture is much more mixed. The east riding of Yorkshire, for example, has done well on maintaining bus services. A north-south split is not reflected in the way she suggests.

[John Woodcock]

What the Minister has said is potentially important and will be listened to by councils throughout the country. Is he actually saying that if any council cuts bus services, it is the council’s fault and not a result of the drastic reductions in local funding imposed on councils by the Government?

[Norman Baker]

What I am saying—I hope that I have said it fairly—is that it is a challenging position for local authorities. They have received reductions in funding, which has meant difficult decisions for them, and I can understand why some of them have looked to their bus services. However, within the framework in which they operate, some have managed to protect their services, and, as in the case of Bedford, even enhance them. Others have made limited cuts. Others have taken an axe to services. Those who live in Hartlepool and elsewhere need to ask their councils why they have taken an axe to services when other councils have not.

[Mr Wright]

If the Minister will let me continue with my rant, that Pontius Pilate approach to decision making will not wash if he wants to be a champion of local bus services. Will he comment on the second part of my remarks, which concerned future financial arrangements and possible cuts to bus services as a result of the announcements in the autumn statement?

[Norman Baker]

I will. I always try to respond to all points made by hon. Members, as those who have heard me respond to debates will know. I will deal with those points, but first I will deal with the points that the hon. Gentleman made during his speech. He said—I think that I am quoting him accurately—that we need a complete change in how buses are regulated. I point out that at the moment, the regulation of buses is a consequence not just of deregulation in 1996 but of 13 years of his Government between 1997 and 2010. The record will show that when the Local Transport Bill was before the Commons and I was on the Committee considering it, I wanted to go much further in the direction that he is now advocating than did the party of which he is a member in 2008.

[Mr Wright]

Will the Minister give way on that point?

[Norman Baker]

I will, but I need to make progress.

[Mr Wright]

The Minister has had 18 months in office. He has just set out his approach. When will he enact it?

[Norman Baker]

I will not give way again, as I am trying to answer the hon. Gentleman’s points, and he is anticipating me all the time. The fact is that we now have a regulatory framework that his Government put in place in the Local Transport Act, and the record will show that it would have gone more in the direction that the hon. Member for Barrow and Furness wanted if his Government had accepted the amendments that I tabled at the time.

Our position has been set out clearly. The Government await the results of the Competition Commission’s inquiry. It would be premature to make judgments about the landscape of the bus market until it has reported. We will read the Competition Commission report carefully, consider the arrangements for the bus service operators grant at the same time and in parallel and make it clear where we are going as soon as we have had a chance to digest the final report. That is the responsible course of action, given where the Competition Commission is at present.

[Julie Hilling]

Will the Minister give way?

[Norman Baker]

Yes, but for the last time, as I need to make some progress.

[Julie Hilling]

I thank the Minister for giving way; he is being generous with his time. My question is simple: have we any idea when the commission is likely to report?

[Norman Baker]

Yes. We will have clarity from the commission, and clarity from the Government on BSOG, in the early part of next year. We will then be able to answer questions in more detail based on what the commission has said.

I think that it is unfair to paint the autumn statement in the negative way the hon. Member for Hartlepool did. He said that things would get worse. I do not want to have a debate about the finances, as this is not the place to do it, but I will give one statistic. The day after the general election, our interest rates were higher than Italy’s. They are now lower than Germany’s, which suggests that the Government are handling the economic position rather better than he gives us credit for.

In addition to the money for green buses announced this week and for retrofitting existing buses, the Chancellor gave transport authorities another £50 million this week in his statement. I hardly think that this has been a bad week for transport, or for local authorities as far as transport is concerned. It seems to be a good week in terms of what has been handed out.

I mentioned that the Competition Commission’s report would be published shortly. The Department has submitted its formal written response to the provisional remedies, which is available to view on the Competition Commission’s website. In the response, I broadly welcomed the provisional remedies. I believe that they have potential to improve multi-operator bus ticketing in particular, and I welcome the commission’s focus on that issue in its recent inquiry into the bus market. There is no question but that better integrated ticketing can help by enabling passengers to make more seamless journeys. Smart ticketing can also play an important role. That is why I have committed to delivering, with operators and public sector bodies, the infrastructure to enable most public transport journeys to be undertaken using smart ticketing by December 2014, to answer the point raised by my hon. Friend the Member for Blackpool North and Cleveleys.

I mentioned the Local Transport Act 2008. There has been some concern that the provisional remedies have been ambiguous in terms of the tools in the Act that can enable authorities to increase the quality of services, so let me be clear. Statutory quality partnership schemes, quality contract schemes and voluntary and qualifying agreements remain useful tools for local transport authorities to deliver their public transport policies. That is the present position. The Government have taken no action to undermine quality partnerships or quality contracts. We will consider where we are after the Competition Commission has reported. In the meantime, it is perfectly open to local authorities to use the terms of the 2008 Act. It is available on the statute book for them to use if they decide that that is what they want to do.

The hon. Member for Bolton West (Julie Hilling) discussed the general price of bus fares. She is absolutely right to express concerns about that. Over the past 30 years, the trend has been that the average cost of travelling by bus has increased more than the average cost of travelling by train or car. We recognise that buses are used disproportionately by poorer people. I want to ensure that we consider that issue in our response to the Competition Commission’s inquiry into the bus market. It is not for us in Government to start telling people how much they should charge for buses in Kettering or anywhere else, but we must ensure that the system and the market work properly, which is what we are trying to achieve as part of our consideration of the Competition Commission responses.

I was interested in the point made by my hon. Friend the Member for Milton Keynes South about the deal reached between the council and Arriva to provide a 50p rate before 9.30. It is an exceedingly interesting idea that a bus company and a council can come together to create a new, innovative arrangement that meets the needs of local people and, presumably, the bus company as well. We need more arrangements such as that, and I hope that we will see what we can do to encourage such innovation across the country.

[Iain Stewart]

I would like to place it on record that a key body instrumental in brokering that deal was the Milton Keynes Pensioners Association. It required good work on all sides, but the association had an instrumental role in helping that deal be struck.

[Norman Baker]

I am grateful to my hon. Friend for rightly putting that point on record.

Several Members raised the importance of consultation. I welcome the Transport Committee’s emphasis on it, and it is right that Members have mentioned it here. It is also right that councils and operators considering changing services consult properly. It is clear from the evidence that the Committee and I have seen that there are some good examples and some pretty ropey ones. The message that I want to give to bus companies and local councils is that they must consult properly and take into account the consequences of any changes that they propose. Actually, if they consult properly, they often get some good and constructive responses and end up with a solution that is better than the one proposed, not just for customers but for the company.

The Chair of the Transport Committee asked when I expect we will know what the Association of Transport Coordinating Officers is doing with its assessment. I mentioned the annual statistics, but the ATCO assessment is happening now, and we expect the results early in the new year. There is no reason why the Department should not share that with the Committee as and when it comes to us, so I will ask my officials to ensure that we are in touch with the Chairman then.

The toolkit has been mentioned by a number of Members. Passenger Focus is gathering evidence from local authorities and bus operators to find examples of good practice. It is receiving good support from the authorities it has contacted and we expect to see a first draft in January, so we and Passenger Focus are making good, swift progress, which is rightly important to Members present.

The only other points that I want to pick up on are two of the issues to which the Chairman of the Committee referred—namely the bus service operator grant and the concessionary fares reimbursement formula. Contrary to the information that has just been provided by the hon. Member for Barrow and Furness, it is a fact that the Confederation of Passenger Transport UK, to which I spoke immediately after the spending review, told me that, in general terms, it felt that the BSOG reduction, given the notice that we had given and the limited amount of reduction, was one that it could in general absorb without fares rising or services being cut. That is what the industry told me. I am happy to give the hon. Gentleman the exact quote if he wants. That is what it said.

[John Woodcock]

I am aware of the quote, but does the Minister accept that, while it is one thing to look at that in isolation, the situation is entirely different if we combine it with the two other substantial cuts faced by the industry, and that it is simply unrealistic to expect things to remain the same?

[Norman Baker]

There is an issue as to the extent to which other elements of what is happening in the wider market, including the price of fuel, what is happening in the world market, the eurozone or any other factors outside our control, affect the operation of bus services. The hon. Gentleman has referred specifically to the BSOG reduction and the industry has given me a specific response. That is what it said and we should stick with it.

On the concessionary fare reimbursement formula, we have not changed, in any shape or form, the legislation that we inherited from the previous Government. It requires councils and transport authorities to deal with operators in a way that reimburses them so that they are no worse off and no better off from handling concessionary fares. That is a legal requirement and it has not changed. All we have done is issue guidance to indicate to local authorities how they should perhaps discharge that function. They are under no obligation to follow that guidance if they do not wish to do so. The remedy for bus companies that are unhappy with that is to go to an independent appeal. Not very many of them have done so and not many appeals have been won. If bus companies are receiving less money from local authorities and are not seeking to appeal, or do not win appeals, that suggests that they were overpaid previously, contrary to the terms of the legislation. That is a simple analysis of the situation. If, on the other hand, they win their appeal, it shows that local authorities have not been sufficiently reimbursing them on a no better, no worse-off basis. The legislation has not changed at all. I think that, to some extent, the argument is something of a diversion.

I am very conscious of the importance of buses in our country. I do not underestimate the difficulties of local councils in particular, and I am concerned about the level of supported services in some parts of the country, as opposed to the commercial services, which I think are, by and large, all right. We need to see the picture across the country. One effect of localism is that some councils are handling this very well while others are handling it very badly. It is not for us to say that a local council must follow a particular procedure, but I think it is the right of people in those areas to ask why there are no buses in their council area while they are running very well indeed across the border. That is a legitimate function for local people to practise.

We have supplied a lot of help to the bus industry in the way I have described—through the green bus fund, the local sustainable transport fund and the money that the Chancellor has given this week—and I hope to make further helpful announcements in the not too distant future.