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Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Walker. I am pleased to launch this debate on the Transport Committee’s most recent report on bus services, “Competition in the local bus market”, which we published in September. It follows our previous report on bus services after the spending review. I intend to follow up some of the issues that we raised.
Bus services are the Cinderella of public transport. They are a lifeline for millions of people, enabling them to get to work, school and college, and to hospitals, shops and vital amenities. More than 5 billion passenger journeys were made by bus in 2010-11, more than three times the number of journeys made by National Rail, yet bus services receive less subsidy and a fraction of national attention.
Our reports focus on bus services in England outside London. Buses in Scotland, Wales and Northern Ireland are the responsibility of the devolved authorities, and London has a more regulated bus system than the rest of England: services are provided under franchise arrangements set out by Transport for London. Bus services in London receive more local authority subsidy than the rest of England put together. It is perhaps not surprising that London bus services are regarded as an example of successful public transport provision, and that bus use in London grew by more than 50% in the decade to 2010 and continues to grow. By contrast, bus usage outside London fell.
It is sometimes forgotten that buses are the most popular form of public transport. Some 4.7 billion passenger trips were made in 2011-12, and half of those were in London. The amount of bus travel has grown, particularly concessionary bus travel. In 2011-12, holders of concessionary bus passes for older and disabled people made an average of 109 bus trips each. The number of fare-paying trips outside London, however, has fallen by more than 5% in the past five years. Bus demand outside London fell in the second half of 2012. Does the Minister think that that is the start of a new downward trend as funding cuts bite on fare levels and the number of services, or does he regard it as simply a blip?
Buses play a vital social and economic role. More than 50% of bus trips are made by people in the lowest two income quintiles, and more than half are made by people aged under 20 or over 60. Our earlier inquiry into bus services after the spending review received numerous letters and e-mails from people across the country telling us about the direct impact on their lives of reductions in bus services due to cuts in funding. Our inquiry was much strengthened by evidence from users of bus services who told us in great detail how important bus services were to them and how they had been affected by their withdrawal.
About 80% of bus services outside London operate on a fully commercial basis. The remainder are supported by local authorities. That includes many evening and weekend services, as well as many rural services, which provide vital support to local communities. Our earlier report drew attention to the combination of funding cuts that seriously affected the provision of supported services. Cuts in central Government funding to local authorities are having a major impact. Not only was local authority funding reduced by 28% overall from 2011-12, but the subsidy provided to bus operators—the bus service operators grant—has also been reduced by 20%. That is likely to have made some previously commercial services unviable.
The Campaign for Better Transport has recently published research showing that local authority support for 20% of tendered bus services was reduced or withdrawn in 2011-12, 41% of local authorities made cuts to spending on bus services and 10% cut spending by more than £1 million. Can the Minister confirm whether the Department for Transport knows how much local authorities are now spending on bus services, following cuts in central Government funding to those authorities? Can those data be put in the public domain? It is not satisfactory to have to rely on data extracted from local authorities by freedom of information requests, as did the Campaign for Better Transport research. We need to know the full national picture.
The Minister spoke to the Committee about promoting examples of good practice where local authorities have found innovative ways to provide services despite funding cuts. What examples can he give us? How has the Department set about promoting good practice? What effect has the cut in BSOG had on both commercial and supported bus services? Has it led to more pressure on budgets for supported services? The Government recently consulted on reforms to BSOG, including the possibility of paying some of it to local authorities rather than operators and using some of it to support the better bus areas fund in future. When will decisions on that be announced?
Our September report considered the recommendations of the Competition Commission aimed at improving competition in the local bus market. It is a difficult matter, as there is little evidence to suggest that more head-to-head competition between bus companies on routes will provide better service. Where such competition exists, it has often been detrimental to passengers; it has not made bus travel more affordable. Between 1997 and 2010, the cost of motoring increased by 32.5%, while bus fares increased by 76.1%. The reality is that passengers tend to benefit from partnerships rather than on-route competition between local authorities and operators.
During the course of our inquiry, we visited Oxford, where a voluntary partnership has led to significant improvements. Services have been rationalised, improving the city’s environment and traffic flow, timetables have been co-ordinated and a smart card has been introduced that can be used on any service. Passenger numbers have increased. Partnerships are the way to improve bus services. If possible, they should be made by voluntary arrangement.
The Government have a role to play in promoting best practice, encouraging local authorities and operators to work together and ensuring that the competition authorities do not block or inhibit sensible arrangements that benefit passengers. The Competition Commission has done some valuable work, but its focus is narrow. It puts far too much emphasis on head-to-head competition and misses the wider context of what passengers seek from bus services and the impact of deregulation. Our report questioned whether the Competition Commission had pulled its punches when it came to challenging major firms’ dominance in certain areas. The concept behind bus regulation was that it would lead to competition on all routes, which would improve passengers’ experience and reduce fares. However, the evidence shows that, in practice, five major bus companies dominate the whole bus service.
It might not be possible to make voluntary arrangements to improve bus services across the country. That reality was anticipated by the last Government, which is why, during the last Parliament, legislation was introduced for statutory partnerships and franchise arrangements known as quality contracts that put the emphasis on local authorities to specify what they want bus operators to provide. This Government have kept that legislation on the statute book. When we spoke to the Minister about it during Committee sessions, he assured us that the statute would remain in place, but it is unclear how far the Government are committed to encouraging local authorities and local transport authorities to use that legislation.
In our report, we discussed the problems of being the first authority over the line in setting up a quality contract. The Government seem determined to provide no assistance to such a local authority, and I would be pleased if the Minister clarified their position on statutory partnerships and quality contracts. In what circumstances would the Minister encourage a local authority to pursue such options?
The creation of the Government’s better bus area fund is very welcome. The Campaign for Better Transport has shown that the fund has mitigated some of the impacts of cuts in some areas. The Government have linked the provision of that funding to the development of partnerships, but local authorities wishing to set up quality contracts are not eligible for it, which looks like a strong signal from the Government for them not to go down the road of using quality contracts. I hope that that is a misreading of the situation and that the Minister will confirm that, if a local authority wishes to use the Local Transport Act 2008 to set up a statutory partnership, it would be eligible to bid for better bus area funding.
The introduction of multi-operator ticketing is another important aspect of any bus partnership. We recommended that local authorities should have the power to implement a multi-operator ticketing scheme where a voluntary agreement cannot be reached. The Government have said that they will clarify guidance on the use of such powers under the Transport Act 2000 and consider the need for further legislation. Will the Minister clarify the time scale for that work and say how he will decide whether new legislation is needed? Should it be needed, is there any prospect of new legislation being enacted during this Parliament?
Another important issue relates to what happens when a commercial service ceases and the local authority decides to support that service to enable it to continue. The operator of that commercial service has a significant advantage over its competitors, because it knows the revenues and costs associated with running the service. The Competition Commission estimated that the resulting reduction in effective competition for tenders costs local authorities between £5 million and £10 million a year.
Information on those services could be provided voluntarily by bus operators, but they have so far refused to disclose it, citing commercial confidentiality. The Government are exploring that situation, but the Committee recommended that they should set a deadline for operators to agree to disclose the information and introduce legislation if operators fail to do so. Will the Minister tell us what progress is being made on that issue, and does he contemplate introducing legislation to force companies to disclose the relevant information?
The disclosure of data is also an important consideration in other areas. Passenger Focus is doing important work in surveying passengers’ views of services. Overall, satisfaction levels are relatively high: on average, 85% of passengers are satisfied with their service, but that global figure hides considerable disparities between operators. We want more disaggregated data to be available, so that the performance of operators in individual areas—and, indeed, that of individual operators—can be properly assessed. That will require more work on the collection of underlying data. Does the Minister share our view that more information on customer perceptions will help drive up service levels, and will he support Passenger Focus in getting the necessary funding and assistance to undertake that work? More could be done to publish data on operators’ performance—for example, on punctuality and cancellations. Far less information is available for bus services than for trains. We did not sense that the Government are seeking the disclosure of data, so will the Minister explain and elaborate his view?
As part of our inquiry, we took evidence from the senior traffic commissioner, Beverley Bell. The traffic commissioners play a vital role in regulating the safety and punctuality of buses. Ms Bell told us that the performance of some bus operators was so poor that they ought not to be in business. The Competition Commission has recommended that the traffic commissioners should draw up a code of conduct for bus operators to prevent buses from engaging in anti-competitive behaviour on the road. Ms Bell told us that she did not have the resources at her disposal to do that satisfactorily. Has progress been made with the code of conduct? Is the Minister concerned that the traffic commissioners may lack the resources necessary to do their job effectively?
It is worth reflecting that the Office of Rail Regulation, which regulates rail services, spends about £29 million a year on staff and office costs, compared with the £15 million spent by the traffic commissioners. The seven traffic commissioners in Great Britain, who are responsible for the safety and punctuality of the whole bus industry, are supported by 138 staff, of whom a substantial proportion are devoted to the licensing of goods vehicles. The Office of Rail Regulation has 280 staff, with additional rail regulation and safety staff at Network Rail. That indicates the contrasting approaches to regulating bus and rail services, and therefore to protecting the interests of bus and rail users.
We recommended that the roles and resourcing of the traffic commissioners should be reviewed before the next spending review. Will that review take place, and will the wider review of non-departmental public bodies mentioned in the Government response to our report cover such issues? Will that review be made public? In our report, we compared the limited resources available to the traffic commissioners and the much more generously resourced Office of Rail Regulation as another example of how buses can be characterised as the poor relation of rail. The subsidy for bus services is lower than that for rail, even though it unambiguously helps the least well-off. The leadership in the bus industry is also less visible than that in the rail industry, particularly since the formation of the Rail Delivery Group. Stronger leadership—for example, in driving the introduction of new ticketing technology—would benefit both bus companies and passengers.
In conclusion, these are potentially troubling times for the bus industry, and therefore for bus passengers. Services are under threat, demand outside London is dropping and there are significant funding pressures. There is uncertainty about the regulatory environment, with quality contracts and statutory partnerships being unused and the traffic commissioners struggling to cope with their work load. The Competition Commission has offered helpful recommendations, but they do not address the key issue of the need for partnership. Indeed, the Government’s strategy for buses is unclear. I hope that the Minister will offer some reassurance that he has a positive policy for buses and that there is more to Government policy than funding cuts and voluntary initiatives. Millions of bus users across the country deserve better.
Iain Stewart (Milton Keynes South) (Con)
It is an honour to serve under your chairmanship, Mr Walker, and it is always a pleasure to follow the Chair of the Transport Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman). I certainly enjoyed working with her and my Select Committee colleagues on the inquiry.
Bus travel certainly affects many of our constituents, and I am probably not alone in having the issue generate a fair chunk of my e-mail inbox and postbag. It was one of the first issues that I had to deal with after I was elected, and the Minister may recall that he answered an Adjournment debate that I secured within a few weeks of the general election. Before the election, my local bus company had unilaterally decided completely to reorganise its route network and timetable, without holding effective consultations, which created many problems.
I will not trouble hon. Members with the details, but many of the issues have now been satisfactorily resolved with the council, the bus company and a new bus users group. None the less, that underlines the importance of the issue and the need to have effective consultation between all the different players in the industry. There has been a happy outcome; bus usage is up in Milton Keynes. The latest figures show an 8% increase. We even got a name check in the Government’s document, “Green light for better buses”. I hope that some of the lessons that we have learned locally will be of wider benefit to the country.
The main conclusion that I draw from our investigation is that each local market is different. There is no optimal one-size-fits-all system of regulation for local bus services. What works in a large city region might not be applicable to a small cathedral city, which might be different from a new town, which might be different from a semi-rural area with many market towns and villages.
As part of our investigation, we visited Oxford, which had the most impressive transport model. I accept though that it might not be directly applicable in other areas. Good co-ordination between the different bus companies and the local authority on timetabling, routes, the location of bus stops and, crucially, ticketing has led to a welcome increase in bus usage. The model allows the ideal form of competition, without the negative aspect of different companies aggressively competing for customers.
Organised competition enables passengers to choose between different operators and drives up standards. If one operator lets its standards slip—unreliable and dirty buses and unfriendly drivers—passengers can easily switch to its competitor. I very much liked that model and saw that it could be used in other areas. The Government’s better bus area fund will help allow other local authorities to explore similar schemes and to adjust them to suit their own circumstances.
I also welcome the Government’s decision to retain some flexibility for local authorities in the regulatory structure. As I have said, different models will suit different areas, and it is right for local authorities to select the most appropriate one for their area. A successful scheme should not be kept as a secret that no other authority can pick up on. I agree that there is a role for the Department for Transport and for bodies such as the Local Government Association to share best practice and to encourage similar types of authorities to look carefully at certain models.
Furthermore, I suggest to the Government that we explore ways to move beyond just bus regulation systems—although, obviously, that must remain the main focus. There is scope to consider how regulation might be combined with buses and other modes of public transport, such as local rail services or tram services, which are being developed in many English cities.
PLUSBUS is a scheme that allows combinations of rail ticketing and bus ticketing, which is fine as far as it goes, but I suspect that it is not particularly well known or well used, and a lot more work could be done in that area. Indeed, when we looked at the competition element in the inquiry, I asked the Competition Commission whether it was looking at competition in the context of local transport services as a whole rather than just bus against bus, and I was not satisfied that it was. Clearly, better decisions could be made in that area further down the line.
Looking at transport services as a whole will be particularly important as technology evolves and more smart-ticketing options become available. I am talking about not just multi-operator tickets, which passengers can use to pop on and off different buses run by different operators without having to take a new ticket, but multi-mode tickets. The Transport Committee saw such a scheme on our recent visit to the Netherlands, Germany and Switzerland as part of our rail inquiry. One of the lessons that we received, particularly in the Netherlands, was on the development of end-to-end journeys. Dutch state railways provide the equivalent of Boris bikes and bus tickets, tram tickets and railway tickets, and it even hires out electric vehicles in city centres. The technology to allow that to be done seamlessly is developing all the time and will open up different opportunities in the future.
The single key lesson must be that passengers have confidence that when they use their smart tickets, they will be charged the cheapest fares. The system will not work if there is a fear that their accounts will be debited a vast sum of money because they have selected the wrong permutation of journeys. There must always be confidence that the consumer will get the best value ticket. I am not sure whether that requires specific Government regulation, but it is something that needs to be taken on board.
There is an upward pressure on bus fares, as there is on every mode of transport, whether private or public. That is primarily a product of rising fuel energy costs and of councils and the Government having to grapple with the public deficit, and that is not going to go away. However, I take an optimistic view. Potentially, there is a bright future for bus usage and bus fares. It is surely an economic fact that, if we encourage more people to use buses, there will be a downward pressure on fares. The reason for that is simple: if the same fixed costs are covered by a greater number of users, the unit cost will be reduced. That is a basic economic fact.
Many studies have shown that the primary factor valued by both existing and potential bus users is not so much cost but the frequency and reliability of services. If we can instil confidence in people that bus services are reliable and effective, more and more people will be encouraged to use them. There are many good examples of transport systems around the country. I highlight in particular the scheme in Oxford, which has a lot of potential.
I urge the Government to look at our recommendations for sharing best practice and for making sure that local authorities are encouraged to develop these new schemes, and I am sure that that will deliver a healthy increase in bus patronage in the future.
Graham Stringer (Blackley and Broughton) (Lab)
It is now more than 25 years since buses were deregulated outside London. I do not like to use extreme language, but deregulation has certainly had a very damaging effect on public transport, especially in the metropolitan areas, other urban areas and the shire areas. I have made many speeches in favour of some sort of re-regulation of the buses; the Minister has heard many of them over the years, and, on occasion, we have agreed. I suspect that we still do agree. I disagreed with some of my party’s bus policies when it was in power, and I still maintain those views. I am pleased that the shadow team now seems to have better policies than we had when we were in government.
The focus of my speech today is on the report of the Competition Commission, which was considered by the Transport Committee. Before getting on to the specific recommendations of both the Committee and the commission, however, it is worth taking up the point made by the hon. Member for Milton Keynes South (Iain Stewart) about the segregation of the bus industry. This is a simplification, but I think that it is essentially true that the bus system in London works extremely well. It has never been deregulated; it has received significant investment; and bus companies in London take less profit out of the system than they do in the metropolitan areas. So the bus system here in London is good.
However, if we look at the metropolitan areas, whether we look at the statistics for the last year, for the period from 2005 or even go back to deregulation, we see a steady progression of fare increases above inflation. In real terms, fares have doubled over all that time and passenger numbers have dropped by 45%. In London, the direction has been the opposite. That is an indication of where public money is better spent in the support of public services.
In the shire areas—I represent a very urban constituency, so I am not an expert on the shire areas—bus services often do not exist at all. It is not a question of their not being subsidised; they do not exist. As my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) said, when approximately £4 billion a year goes into the rail system—I am not against that—and parts of the country do not have any bus services, either commercial or subsidised, we need to take a serious look at the situation.
Parts of the bus system, in historic towns such as York, Oxford or Cambridge, are working. In those towns, the authorities have been able to restrict car access to the town centre and they have set up partnership schemes. Therefore, if one goes through the different areas, one sees that there are very poor services in many shire areas and limited amounts of competition on the road; declining bus services in metropolitan areas, with increasing fares; relatively good services in towns such as Lincoln, York and Oxford; and excellent services in London. For any Government who want to provide services to the whole country, it cannot be satisfactory to see that differentiation of service.
Before I move on to the reports by the Competition Commission and the Transport Committee, I will make one simple point about the Lib Dem “nearly policy” on concessionary fares. One of the reasons why the decline in passenger usage in metropolitan areas has not been more severe—in fact, it was even halted for a period—was the increased money that the last Labour Government put into concessionary fares. That meant that people over the age of 60 had free access to the buses and used them, which changed the usage of buses for the better.
At the moment, the leader of the Liberal Democrats, the Deputy Prime Minister, is considering whether to take concessionary passes away from people such as me, because we can afford to pay the bus fare or do other things. In a way, one cannot argue about that. However, the Liberal Democrats should also think about congestion. Most of the policy of most of the Governments during the past 30 or 40 years has been to try to get people to leave their car at home and use buses instead. The fact is that, if relatively affluent pensioners can afford buses, they will not pay the bus fare to Stagecoach or FirstGroup if their pass is removed. Instead, they will take their car out; that is what I would do if I did not use the bus or tram in the area where I live. That will lead to increased congestion. I suspect that the Minister sympathises with that view, but I ask him to say to people—within his own party and within Government—that they should think harder about the transport implications before they go too far in pulling concessionary fares.
I will move on now to the Competition Commission report itself. I think that any reading of both the written evidence and the oral evidence that was submitted to the Committee will show that the Competition Commission’s report was deeply flawed. Before I get on to that, however, I just want to say one or two words about competition. It is sometimes assumed—particularly by those from the Labour side who want to re-regulate buses and to introduce quality partnerships in parts of the country—that we are against competition. Nothing could be further from the truth. Where commercial businesses are involved, in order to ensure that we get the best-quality, most efficient and effective service, competition is a good thing. However, the fact is that in most of our big cities and in a lot of our shire areas competition does not exist. In fact, if we wanted to have competition in those areas, it would be necessary to introduce off-road competition, because the competition is not taking place on the road itself. There is no competition in many parts of this country.
If people look at the evidence that the Transport Committee received, they will see one indication of the lack of competition outside London; there is competition in London, although it is not on-road competition. That is the profit levels of companies. If people read the oral evidence that FirstGroup gave to the Committee, they will see that FirstGroup said that it is withdrawing from London because it could make twice the return on the capital outside London that it does inside London; those were not quite the words that FirstGroup used, but they are what FirstGroup meant. If competition were working, the situation would be the other way round: we would expect FirstGroup to be making less and to fight more for profits in other parts of the country. As I have said, nothing that I say in this debate should be taken as showing that I believe that, where there are commercial interests involved, there should not be competition. There certainly should be competition.
Turning to the Competition Commission report itself, I was disappointed by the quality of the evidence that the commission used. It published an interim report that hinted that it was considering pushing towards off-road competition—the quality partnership approach. However, that was changed in the final report. A couple of things happened. We know the figures for FirstGroup because its representatives told them to the Committee, and they also told the Committee that other bus companies had done the same. FirstGroup spent about £3 million lobbying, providing information and—I think that this is a direct quote from the Competition Commission—putting its case as strongly as it could. Undoubtedly, that affected the final recommendations of the report, which were that there should be more head-to-head competition on the roads, without any mechanism to produce such competition or any evidence that it was happening in all but a few places. In fact, I think the Competition Commission gave us three examples of areas where competition was happening, but they were fairly isolated places and not in our major conurbations. That was disappointing.
The Competition Commission officials said, when asked why they had shifted the emphasis in their report, that they thought that specifying the level of services would lead to less competition and higher costs. When we asked why they thought that, they cited the costs in London, but they could not really give any more information. I looked at the evidence that the Committee received before I came into Westminster Hall today. The Minister in his own oral evidence to the Committee—I think that it was in response to question 400, if he wants to look at it now—more or less demolished the commission’s argument, because he gave figures that showed the subsidy per passenger in London was 45p, whereas in the metropolitan areas it was 57p and in the shire areas it was 71p. The commission’s basis for rejecting quality partnerships—without taking evidence—was, therefore, deeply flawed. At the same time, however, the commission had evidence of huge collusion between the bus companies in the north-east. Rather than examining the real costs in London, where profits—albeit not excessive ones—were being made and there was a good service, it used a theoretical model that clashed with the London experience and with what was happening in the north-east. That was one of the flaws.
The commission identified anti-competitive practices in the north-east, and such practices clearly exist in other parts of the country as well, but it is difficult to prove that they do because, by and large, bus companies do not have written agreements not to compete with each other—they just do not do that. When the commission was asked about divestiture, which has happened in other anti-competitive areas, it said that only big bus companies would come in if, in an area such as my part of Manchester, it stopped FirstGroup. The company has been operating a near monopoly very badly in north Manchester, and the commission has said that it would just be another large company that would come in. FirstGroup has operated an appalling business when it comes to running buses in north Manchester and it is now selling its interest to Stagecoach, so there is no intermediate point at which there is on-road competition; there is just the selling of one almost monopoly to another monopolist. The fares have been high in north Manchester, and, although I do not know this for sure, I cannot imagine that Stagecoach will reduce the fares when it takes over the garages.
I believe that the Minister is sympathetic to helping with quality contracts. There is legislation, in the form of the Local Transport Act 2008, that enables such contracts to be put in place. There has, however, been no answer to the question posed by the Transport Committee, and by my hon. Friend the Member for Liverpool, Riverside today, about why the bus service operators grant cannot be used to help local authorities to introduce quality contracts. It will be difficult to bring in a first quality contract. I believe it will save money—I think that the detail of the Committee report is wrong in stating that it will be more costly—but it might be very difficult when we have Brian Souter of Stagecoach saying that he would rather drink poison than allow a quality contract to happen. He and his managers are threatening a scorched earth policy.
When the Minister came before the Committee, he made some helpful comments to the effect that bus companies should follow the law, and I am interested to know whether there is anything else he can do to support the company in west Yorkshire and Nexus, which, I understand, are both still going down the quality contracts route. I believe, as does the Minister I suspect, that the scheme will lead to a better bus service, so if there is a legal option to go down that route the Government really should provide as much support to the quality contract areas as they are prepared to provide to the better bus ones. I cannot see why the quality contract areas should be discriminated against.
This has been a long speech. The Transport Committee’s report is good, and I hope that the Government will move on and support the moves to balance up bus services. Without going through all the detailed arguments, it seems that there is much greater similarity between Greater Manchester, the west midlands and London in relation to introducing franchising operations and a regulated system, than between Greater Manchester, Oxford and Cornwall. I hope that the Government, recognising the success in London, will try to move within the 2008 Act to help the introduction of the schemes, not just in Manchester but in Leeds and Newcastle.
Julie Hilling (Bolton West) (Lab)
We all like to talk about trains when we discuss transport. I do not know what it is, but conversations often seem to end up focusing on them. However, the form of public transport that is most fundamental to us all is the buses. We do not usually get trains to our doors, so unless we are going to get our car out of the garage and drive to the station we need a bus to take us there. We have huge congestion on our roads, particularly in a conurbation such as Greater Manchester, and there is a great loss of money to business and industry because so many people are caught up in terrible traffic jams all the time. We also need, however, the integration of transport, with all our transport modes linking up.
If we think about who uses buses, we know that two groups of people will always have to use them if they are going to use any form of public transport: the young, before they can drive, and the old, when they reach a point at which they can no longer drive—let us hope that we all reach that point in our lives. There are also disabled people who cannot drive, and poorer people who cannot afford their own transport. We need the people who can afford to use their own transport to choose to use the buses, to make them economical, and I will talk in a bit about what happens in London. We need to make the services economical for people to run; we need to save the planet.
When we look at what people want, we see that they do not really want competition. I have never met anyone who cares about who runs their buses. What they want is a cheap and regular service that goes near their door. One of the problems with competition is that no one wants to compete for a contract on roads that do not take people into a city centre. In comparison, on the route along Oxford road in Manchester there are buses every two minutes—or is it every minute?
Julie Hilling
I asked a student who lived there, “Do the buses stop in the night?” and she said, “Oh yes, they stop in the middle of the night.” I then asked, “How long do they stop for?” and she replied, “For 10 minutes, at 4 am.” There are buses every minute, 24 hours a day, apart from during those 10 minutes at 4 am.
A couple of years ago in Manchester, the situation was so bad that no other vehicles could get into the city centre. All the buses were queued far back because so many people were competing to run their buses along that corridor. We can compare that with the estate I live on. The service to Hag Fold stops in the evening, and on a Sunday it does not start until midday, so no one can use the bus to go to church on a Sunday morning, or for a day out. That is the reality of our buses, and I live in an urban area; I am not even talking about a rural district. We need, therefore, planning for services across an area that is not based just on whether a route is profitable. We need a service that goes as close to people’s doors as possible, otherwise those who can drive will.
Cost is incredibly important. My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), the excellent Chair of the Transport Committee, talked about the ever-increasing cost of bus travel, as did my hon. Friend the Member for Blackley and Broughton (Graham Stringer).
For the third time this week, I will talk about my neighbour, Leah, because she will be affected by the cuts to tax credits and other benefits. She is a mum of two who works 16 hours a week and earns £101. She pays £18 a week—£4.50 a day—for her travel card, which, of course, can be used only with one provider that stops serving the estate in the evening. Unless she gets home early enough, she has to pay another bus company to get her anywhere near home. Compare that with £2.80 a day in London for a service that can be used with any provider.
Travel cards are important for reducing costs and opening up integrated services. Look at the liberation of Oyster that we have had for nine years. Those of us who reside in London for a few days each week have been amazed by the Oyster card: people can go on any bus or tube by flashing the cost-effective card. Compare that with people in my area, who have to decide from which company they will buy a travel card on any given day, because a card can be used only on one service, such as First. They have to ask themselves whether the company will manage to take them on the whole of their journey, or whether they will have to buy separate fares because the company will take them on only part of the journey.
Transport for Greater Manchester is trying hard to get some sort of Oyster mark 2 for the conurbation, but there is no surprise that the operators are not co-operating. Fares in south Manchester are 15% to 20% cheaper than those in the north of the conurbation. Having different operators is the only answer, because it surely cannot be true that diesel costs more in Bolton than in Withington. Costs seem to be part of the reason why the operators are not co-operating. What will the Minister do to support areas such as Greater Manchester to introduce travel cards that will liberate services for so many people?
Running a big bus company is a licence to print money. Since deregulation, the companies are earning a profit of some 7% each year at no risk. If a service is uneconomic, the operators can cancel it and hope that the local authority will pay them to deliver it. Quality contracts would enable routes to be bundled so that operators would have to deliver all the routes in a bundle, both good and poor. They will still be able to make a profit, but they could not continue to hold transport authorities to ransom over the provision of a route.
People make choices about where they live and work, and about schools, based on public transport. What are they supposed to do when they lose the bus service that enables them to lead their life? We know of people who have had to give up their job because they have lost a bus service and can no longer get to their place of work. I have a group of women in Blackrod who can no longer go to their church, which they went to for many years, because the bus stopped running along that route. I ask the Government to use the better bus area fund to support all models of co-operation, including quality contracts. They should also do more to support passenger transport executives and local authorities that are considering quality contracts.
As my hon. Friend the Member for Blackley and Broughton mentioned earlier, we know operators have threatened a scorched earth effect by removing all buses if a transport authority wants to go the way of introducing quality contracts. Well, I do not think that a bus operator should be allowed to obstruct the implementation of Government legislation by making such threats. It would not be acceptable for other groups to threaten to thwart Government legislation, so why is it acceptable for a bus operator to do so?
Bus travel has zoomed up in London. Why has bus travel gone up so fast and so far? It is about cost, availability, the Oyster card and regulation, and it is very much about subsidy; it is about the state saying, “Public transport is a public service, not just a means to get around.” My constituents in Bolton West deserve the same sort of service as London residents, and I look to the Minister to address how he can help the Greater Manchester transport authority and my constituents get the service they deserve.
Lilian Greenwood (Nottingham South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate the members and staff of the Select Committee on Transport on securing this debate and on producing such a reasoned and timely report. I was especially pleased to listen to my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), who has chaired the Committee expertly throughout the inquiry and speaks with great authority in support of buses, which are the Cinderella of public transport and, as she says, provide a lifeline for millions of people across the country.
The Transport Committee’s report provides a much-needed critical analysis of the Competition Commission’s investigation. The commission shone a light on the bus industry, exposing serious market distortions and raising helpful suggestions for reform, but the investigation itself inspires questions about the proper balance between competition and regulation and about the future structure of the bus industry. The commission’s report, notwithstanding its considerable strengths, is limited by an assumption that direct, head-to-head competition is beneficial to passengers. Of course, the commission was only following its remit, but perhaps that remit could have been applied a little more widely.
The reality is that sustainable competition on the same route is rare, and most areas settle into a pattern of single-operator dominance, occasionally interrupted by short, intense and disruptive clashes between rival companies. The roots of the problem can be dated to the deregulation regime established by the Transport Act 1985. The then Government’s ambition for widespread competition proved unsustainable. The new market did not achieve balance, as deregulation’s architects had hoped. After the frenzied bus wars of the 1980s and 1990s, a new pattern of dominant operators emerged.
There are exceptions, of course. Thanks to strong campaigning, London was protected from the 1985 Act and was therefore able to build a planned, integrated network, with competitive tendering for routes. With that provision, combined with other factors unique to the capital, bus use has risen dramatically, in contrast to the national decline in patronage. In 1985, one in five British bus journeys took place in London; today, the figure is one in two. As my hon. Friend the Member for Blackley and Broughton (Graham Stringer) has said, that raises clear questions about how other towns and cities can make similar progress.
Where municipal operators have survived, they have proved that they can help to buck the national trend. Nottingham City Transport, which serves the city that I am proud to represent, was named operator of the year for 2012, and strong leadership from the local authority has helped to grow the local bus market. Some challenges are still being overcome, such as establishing an integrated multi-operator smartcard—my hon. Friend the Member for Bolton West (Julie Hilling) explained clearly why products such as the Oyster card, which Londoners probably now take for granted, are so valuable to passengers—but the point has been proved in Nottingham: determined local vision can help to reverse the wider pattern of decline.
For most passengers a lack of quality and choice—or geographic market segregation—is the norm. Some companies have, in effect, established private monopolies, with unfeasible hurdles for smaller competitors seeking to enter the market and without challenge from the biggest operators, which now account for 69% of the market. That is not a market solution; it is a model that has failed. My hon. Friends the Members for Bolton West and for Blackley and Broughton both described the experience in north Manchester, which will be familiar to many.
It is hard to disagree with the Campaign for Better Transport, which states that the Competition Commission’s focus on direct competition prevented it from fully considering alternatives. The Select Committee’s attention to the remaining barriers to quality contracts was welcome, and Labour is working to remove the uncertainty that is holding back some transport authorities. A number of witnesses said that they would like quality contract schemes to be introduced, but there remains, as the report discusses, the problem of who would be first across the line. We would offer genuine support for authorities seeking to develop quality contracts, just as we would for those developing voluntary and statutory partnership agreements.
As the hon. Member for Milton Keynes South (Iain Stewart) said, there is no one-size-fits-all solution. Each local market is different, and local authorities must have a genuine choice about what is right for their area. Specifically, Labour would introduce bus deregulation exemption zones as a mechanism to transfer the risk from local to national Government, giving transport authorities the certainty that they need to commit to quality contracts where that is right for their residents.
Far from seeking to remove the remaining barriers to tendering, the Government’s proposed changes to funding criteria will raise the hurdle still higher. Authorities that introduce a quality contract scheme will be disqualified from receiving better bus area funding. Transport authorities that want to develop future schemes will have the odds weighted against them. I hope that the Minister, who, when in opposition, put on record his support for quality contracts, will withdraw that proposal. Indeed, when the Local Transport Act 2008 was considered in Committee, he speculated that
“a future Government, perhaps of a different complexion,”
which was
“unsympathetic to the idea of quality contracts”
could
“seek to kill the measure slowly”.––[Official Report, Local Transport Bill Public Bill Committee, 29 April 2008; c. 205-6.]
That is precisely what is happening under this Government.
Although the withholding of better bus area funding is a proposal at this stage, it is undeniable that the threat is inhibiting the development of quality contracts. As my hon. Friend the Member for Liverpool, Riverside described, that sends a strong signal to local authorities not to go down that route. When the South Yorkshire integrated transport authority decided not to pursue a quality contract scheme, it was made clear that the Government’s stance on funding had been a major factor in the decision.
I know that the Minister will be studying carefully the responses to his consultation. I ask that he also listens to the recommendations of the Transport Committee and withdraws the proposals that punitively target authorities that choose to pursue tendering. Of course, the proposal to stack the deck against quality contracts comes after a round of swingeing cuts to local transport, including buses. Overall funding for local transport has been cut by 28% and the bus service operators’ grant has been cut by 20%.
Early predictions, optimistically repeated by the Government, that cuts of this magnitude could be absorbed without a substantial rise in fares have been discredited. Fares rose by more than double the rate of inflation last year, and supported bus services, which are often relied on by some of the most vulnerable members of society, were cut by 9.3% outside London. As Passenger Transport stated last week,
“the bus industry is in danger of being forced into another great cycle of decline, in which cost rises, funding cuts and consequent fare increases each give another vicious downward twist to patronage levels.”
Passenger Focus has collected a great deal of evidence on the human cost of the cuts. In some areas, buses have been reduced to mere skeleton services. One passenger told researchers:
“You feel imprisoned in your local area.”
Indeed, the Campaign for Better Transport identified one estate—Burbank in Hartlepool—where bus services have been cut completely. It does not have to be this way. The Government should be striving to achieve something more than the slow subsidised decline of bus services outside London. Despite failings in local markets, buses are still the most used mode of public transport. Travelling across the country and Europe, I have seen the enormous potential that buses hold. But Britain has to grasp the challenge and not see buses as an easy target for cuts. That is why Labour has set out which cuts we would reluctantly support, to protect public transport services.
Thanks to the work of Greener Journeys and others, we know more now than ever before about the economic and social benefits of buses. Jobs and growth and tackling social exclusion are two sides of the same coin. That is why the present reduction in funding is cutting so acutely. Democratically accountable local authorities are best placed to provide leadership, deliver service improvements and promote integration with other modes, including rail. This is what communities need. Real, accountable devolution of spending and decision making can help address market failings when they occur, and Labour is committed to devolution and protecting bus services.
With your permission, Mr Walker, I would like to close by paying tribute to the work of my hon. Friend the Member for Barrow and Furness (John Woodcock), who, unfortunately, has had to step down from his role in the shadow transport team following a serious injury. I am sure that all hon. Members will wish him a full and speedy recovery.
The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I thank all those who have taken part in this afternoon’s debate. I particularly thank the Committee and its Chairman for its report on competition in local bus markets. It is good to have time to debate the issue once again. The report was a welcome addition to the evidence base on this subject. It reminded us once again that, although competition is important, the ultimate prize is to improve bus services for the travelling public. That must be our primary aim. That was a key test for the Government when considering the Competition Commission’s recommendations—namely, would they result in more passengers travelling on the bus?
There is a point of uncommon purpose and agreement with my colleague the hon. Member for Nottingham South (Lilian Greenwood): Greener Journeys has made a welcome contribution to the debate on buses. We know from the work by Greener Journeys and others that bus services make a significant contribution to the economy. Sustainable growth relies in part on a good quality, affordable bus network to get people to jobs, training and education. I think that I have said so before, but if I have not, I can confirm that I am pursuing that matter and that welcome report with colleagues in different Departments across Government. Clearly, it is not simply a transport matter, but an employment and environment matter. Other benefits might flow from the recommendations being taken forward.
Although the overall picture is mixed, I am positive that we are headed in the right direction. There are many areas of the country where bus services flourish and where significant progress is being made in ticketing, infrastructure and integration. I have seen first hand in places such as Sheffield and Oxford the power of partnership working to make a real difference to bus services in city centres and beyond. There is significant investment going into new vehicles, new technology and new services by the better bus companies, both big and small. There is good innovation out there. I pay tribute to Trent Barton. It is always unfair to pick one company out, but I have been very impressed by the way that Trent Barton markets individual services, which is a testament to how a good bus network can be built through good management. We see a key example there.
I have been keen to build on investment by encouraging the bus industry to think about what more it can do to get people on to buses. That is why I am pleased that bus companies across the country have come together with two exciting offers in response to my suggestions. The first, BUSFORUS, is a website to collate information on bus services and tickets in one place for young people. The Passenger Focus survey, to which the Chairman of the Select Committee referred, showed a high level of satisfaction with bus use. Of course, it masked a slightly less high level of satisfaction among young people. That is helpful in persuading bus companies that they should perhaps give more consideration to young people in the way that they conduct their business. They are now doing so, and they have made a good start with the website.
Graham Stringer
The Minister makes a fair point about the survey masking dissatisfaction among young people. An even bigger point, because the survey is of bus users, is that it completely masks the dissatisfaction of the people who have abandoned bus services because of poor quality or high fares. The figures of 88% and 92% satisfaction are misleading, because they exclude the people who no longer travel by bus.
Norman Baker
It is true that those no longer travelling would by definition be excluded, because they would not have been on the bus to be subject to questions. I suppose the same applies to rail services. However, if bus services were being abandoned because of poor quality, I would expect that to be highlighted by the people still on the bus, but who have not yet abandoned it, so I do not think that the hon. Gentleman’s point is necessarily true, if I may say so. It might be that bus passengers are no longer on the bus because they have decided to travel by a different mode—car or train—or because the bus is no longer there in the circumstances that suit their individual needs.
The second deal was Bus for Jobs, which helps jobseekers get back to work by offering free travel for the whole of this month of January. Those are exactly the sort of leadership examples that should be demonstrated by bus companies. I will continue to work with the companies, and cajole them if necessary, to ensure that they continue to put passengers’ long-term interests directly at the heart of their businesses. Of course it is in their commercial interest to do so, and therefore they ought to be doing that for themselves, as many of them are.
Lilian Greenwood
I have listened with great interest to what the Minister said about BUSFORUS and Bus for Jobs. Can he set out his assessment of how well those initiatives by the bus industry are meeting the needs of young and unemployed people, in particular given that Bus for Jobs only lasts for a single month?
Norman Baker
The Bus for Jobs initiative is being assessed by the bus companies, and I spoke about it to a leading member of the bus industry yesterday. I will be keeping in touch with the industry, to see what the initial response is and whether there is a case for extending the initiative. That would be a matter for the bus companies, but we want to see the response first—us from the Government point of view and them from a commercial point of view. If the initiative is successful in persuading people who have not considered the bus before to take the bus and then to stay with the bus, it might be a sensible commercial proposition for the bus companies.
However, I have made no secret of my belief that the bus companies need to do more to help young people, and that has formed a key part of my speech on major set-piece occasions when I have addressed the bus industry. The industry has responded sensibly and well to that challenge, and the companies know that I will continue to engage with them formally and informally. The subject is always on the agenda of the Bus Partnership Forum, which I hold with the industry six-monthly and in which young people also participate.
Overall, commercial services, which represent about 80% of bus mileage, are holding up quite well, which is good news that we should all welcome. I understand the challenges of being in opposition, but I encourage Opposition Members not to talk down the bus industry, which is easy to do—I have been in opposition myself. They should recognise what is going well, as well as not so well. Commercial services are holding up, and we should take some comfort from that.
Although there is good news on that front, I recognise—I am the first to do so—that in some areas of the country the garden is not quite so rosy. Recent statistics show that the supported service network—only 20% of overall bus mileage, but important for many people—is not as healthy as the commercial sector. The picture is not uniform, as it inevitably will not be in an era of localism, such as the one we are moving into, because the decisions are made locally by elected councillors. Some councils, such as East Riding, have prioritised bus services in setting their budgets, while others, such as Surrey, have reduced their spending but have done so creatively and carefully so as not to translate cuts into significant service reductions.
Other councils, I am sorry to say, have made what appear to be arbitrary and swingeing cuts that fail to consider properly the needs of their local residents—I refer to North Yorkshire and Cambridgeshire—which can lead to people in isolated communities, particularly in rural locations, having restricted access to education, training, work, health care and other important services. We have heard about how those who use the bus tend to be at either end of the age spectrum, so young people and elderly people are especially affected if such cuts are made, because they rely more on public transport to get around.
Julie Hilling
While the Minister is talking about local authorities continuing to support bus services, has he investigated whether those that do not have suffered more extreme cuts from the coalition Government than others? A lot of Labour authorities, for instance, have had much higher cuts to their spending than Tory councils. I recognise that that might not be the case in the two examples he gave, but I was wondering what the correlation is with local authorities that can no longer support such services.
Norman Baker
The allocation of money to local councils and their predominant concerns are matters not for the Department for Transport, but for the Department for Communities and Local Government, which sets the allocation for local council funds. We do not control that, but allocate our own funds, which we are increasing through the green bus fund and the better bus areas and community transport. That is what our Department has been doing, but I am unable to answer the hon. Lady directly, because that is not my Department’s responsibility. I do not believe, however, that there is a direct correlation between the reductions in local funding from the DCLG and the cuts in bus funding.
Indeed, what is reflected—quite properly—is the exercise of local discretion. Some councils have decided to protect bus services and to make them a high priority, while others have not sought to do so, which is entirely up to them, because they consist of elected local people. I certainly encourage individual constituents in those areas where bus cuts have been significant to ask their local councils and councillors why they have decided to prioritise bus cuts, as opposed to anything else, while perhaps the councils next door have not done so. To be fair, I referred to non-Labour councils, North Yorkshire and Cambridgeshire, but I can also pick out Darlington, Stoke and such councils, which have reduced their budgets. Things are mixed throughout the country.
Overall, however, bus mileage remains broadly flat, with commercial services in many cases picking up the slack as bus companies continue to look for opportunities to grow their local markets.
Lilian Greenwood
May I take the Minister back to his response to my hon. Friend the Member for Bolton West? The Government are trying to have it both ways, taking credit for progress in the bus industry while blaming local authorities for cuts to services. He must take responsibility for inflicting front-loaded cuts, disproportionately hitting less affluent authorities and forcing councillors to make impossible decisions. The Government are using localism as a way to hide behind the effect of their own decisions.
Norman Baker
That is not fair, and I have already listed some of the extra money that the Department for Transport has made available to help buses. In a moment, I will go on to what we are doing. Moreover, many councils are not making cuts, which demonstrates that there is flexibility. Some have chosen not to make cuts, although there have been reductions across the patch, not only in local councils but in Departments. I do not wish to rehearse the Budget position, but there was a general recognition that reductions in Government expenditure were necessary. Indeed, the hon. Lady’s party was also committed to a large swathe of cuts had it been returned to power in 2010. In the Department for Transport, we are doing what we can to protect bus services, and I hope that local councils have the same objective—some appear to be discharging it well, others less so.
We are doing our bit to help, and we remain committed to supporting local bus markets through direct operator subsidy, through DCLG funding of local government and through our targeted investment packages. That includes £70 million on better bus areas, which was a bolt out of the blue and a windfall that the bus industry was not expecting, with more to come for those places that successfully apply for full devolution of bus subsidy. That also includes around £200 million in capital funding for major projects in Manchester, Rochdale, Bristol and elsewhere, and many of the 96 projects made possible by the £600 million local sustainable transport fund, which is a brand-new Government initiative and provides a major increase in spending on sustainable transport compared with that of the previous Administration.
Many of the 96 projects include improvements related to bus services. In addition, I recently announced a further £20 million for a new, fourth round of the green bus fund, on top of the three previous rounds worth £75 million. Many of those buses will be built in Britain, helping British manufacturing and jobs as well reducing our carbon impact from buses. Such funding, therefore, is not insubstantial and not a bad deal for the bus industry. It comes in spite of the tough financial climate and the need to reduce the structural deficit.
As I have made clear before, however, with such significant amounts of public expenditure invested in the bus market, it was only right for us to consider whether it has been delivering the best service for bus passengers and best value for the taxpayer. That is why we are engaged in a series of reforms to facilitate competition and to increase local accountability for spending on bus services. We are reforming how bus services are subsidised, providing guidance on ticketing and tendering for contracts, and making regulatory changes to encourage more on-the-road competition where the market supports it.
On bus subsidy and the reform of BSOG, I am considering the response to last year’s consultation and will have final proposals before Easter. That will include the treatment of areas where quality contract schemes are planned, which is clearly and understandably of interest to the Committee. Guidance for local authorities that wish to apply for better bus area status will be out later this month.
Mrs Ellman
I am trying to interpret the Minister’s welcome comments. Is he saying that he will be able to give a clear answer about whether local authorities could secure public support for embarking on statutory partnerships?
Norman Baker
That issue was raised at the Select Committee, to which I gave evidence, and it has been raised again today. Local councils want to understand the relationship between better bus areas and quality contracts; that is fully understood. I will not give a definitive answer today. The matter has been subject to consultation, as the hon. Lady knows. The responses to the consultation are being carefully considered, and I will discuss those matters with my ministerial colleagues in the Department for Transport, but I accept the need for clarity, and I intend to provide that so that everyone knows where they stand.
I am pleased to note that, by and large, the Committee’s key findings and recommendations complement and support the coalition Government’s policies that were set out last year in “Green Light for Better Buses”. I have a lot of time for the Chair of the Committee, but I thought she was uncharacteristically unfair when she said that there needed to be more to our policy than funding cuts. That was a gross distortion, and failed to note the direction of travel that is clearly set out in “Green Light for Better Buses” and our proposed changes to funding arrangements. That constitutes a policy that we believe will help to deliver better arrangements for our buses. Combined with our response to the Competition Commission, it sets out a clear policy. The hon. Lady may disagree with it, but it is a clear policy. In fact, the Committee’s findings suggest that she does not disagree with much of it.
We have made it clear that partnership is a highly effective way of delivering quality, affordable bus services, and I welcome the hon. Lady’s endorsement of partnerships as a good way forward. Our better bus area proposals are indicative of that. The purpose of such areas is to ensure that councils and operators work together, because that is more successful than a council wanting to drive forward policies, perhaps for good reasons, when the bus industry is not interested. Similarly, if the bus industry has good ideas, but a council is unresponsive, those ideas will not be delivered. The proposal to financially incentivise two groups of people to come together is entirely sensible, and can only work to the benefit of the public.
We will support the integration of services when that is in the public interest, and we will encourage the roll-out of smart, multi-operator ticketing. We will monitor local authorities as they develop their partnership agreements, liaising with the Office of Fair Trading when necessary—the Chair of the Committee made this point—to ensure that competition law does not become an insurmountable barrier to sensible service improvements.
Lilian Greenwood
Does the Minister share my concern that a false distinction is sometimes made between quality contracts and partnerships? We all want effective partnerships, and the Labour Government legislated to promote them. When I was in Copenhagen, I saw how tendering and partnerships between operators and transport authorities do not just co-exist; they are essential to policy success. It is artificial and misleading to present them as two completely different things. They can work together, and funding should follow.
Norman Baker
The hon. Lady is tempting me to respond to the consultation exercise, which I will do with clarity in due course. A point about quality contracts that I made to the Select Committee in response to the hon. Member for Blackley and Broughton (Graham Stringer) was that they are there in law:
“They are there as part of the Local Transport Act 2008”—
I was a member of the Committee—
“They remain on the statute book.”
There is no intention of removing them from the statute book and I expect the law to be respected by all parties. I would take a dim view of any bus company or anyone else who sought to undermine the law of the land as it is on the statute book.
On resources for traffic commissioners, to which the Committee referred, the coalition Government has already given a commitment to review their role in the next financial year as part of a wider review of non-departmental public bodies. It is sensible to include a look at their public service vehicle work as part of that review.
I shall pick up individual points that hon. Members have raised this afternoon. The Chair of the Transport Committee referred to multi-operator ticketing and whether it would require new legislation. We have made it clear that we strongly support multi-operator ticketing. We believe it is important to deliver the sorts of outcomes that passengers want, and to avoid the situation to which the hon. Member for Bolton West (Julie Hilling) referred of passengers buying a ticket and then having to buy a further ticket to get home. That cannot be a sensible outcome for passengers, and cannot help public transport generally. We do not want that.
[Mr Peter Bone in the Chair]
We have made it clear to bus companies that we want multi-operator ticketing. We have also made it clear that we reserve the right to introduce legislation if that does not occur. We hope that it will occur—there is some evidence of that—not least because in Oxford where it is occurring, the bus companies have discovered that it is in their financial interest. I am confident that the bus industry has bought the idea of multi-operator ticketing, and that it will become increasingly common throughout the country. However, we reserve the right to take that forward in legislation if necessary.
We also believe that transparency is important. I welcome any figures that can be produced to help passengers and to give a wider perspective of how the industry is performing, and indeed how the Government is performing. Anyone who knows about my role in Parliament will know that I have been hugely committed to transparency in all sorts of areas throughout my time here. We must avoid placing huge extra burdens on industry for not much return, so we cannot require endless figures to be produced if they are of little value, but in principle we are certainly open to any suggestions for extra information that is genuinely valuable. If the Committee has particular issues in mind, I will be happy to consider them.
My hon. Friend the Member for Milton Keynes South (Iain Stewart) referred to door-to-door journeys. He called them end-to-end journeys. I have discussed with the rail and bus industry how to describe them, but I will not bore him with the nuances of that conversation. Suffice it to say that the general view was that we should call them door-to-door journeys, and that is what the Department is doing. It will shortly produce information on such journeys to aid the process. It will cover the bus and rail industries, and ensure that different modes of transport are joined up. In best practice they are, but sometimes they are not.
My hon. Friend was right to refer to the role of smart ticketing, which is key to delivering door-to-door journeys properly. He said that it is necessary for people to be confident that they will get the cheapest fare when they use a new ticket-purchasing method for their journey. I absolutely share that view. For the railways it is a key objective of the fare and ticketing review that people buy the ticket that is appropriate for their journey, and do not pay over the odds unnecessarily. Obtaining the best possible deal for rail and bus passengers, which also involves transparency, is to the fore of the Government’s thinking.
I always listen with interest to the hon. Member for Blackley and Broughton when he talks about transport, because for many years he has demonstrated a genuine commitment and great knowledge. He referred to London’s upside, but he will recognise that it also has its downside. There are pros and cons with the London arrangement, and I am familiar with both. In any assessment of what is best for one area it would be wise to consider the upside and downside in London when considering arrangements for buses.
The hon. Gentleman referred to concessionary fares. There will be no change in the arrangements during this Parliament. That is what the coalition Government has said, but what individual parties do in their manifestos will be a matter for them as we approach the next general election.
The hon. Member for Bolton West raised the interesting matter of—I suppose, though she did not frame it in this way—the purpose of bus travel. What is the objective that we, or local councils, are seeking to deliver and what are bus operators delivering by running buses? There are different reasons, it seems to me, why buses are run. One is to provide a regular means of transport at a high frequency along corridors such as Oxford road, which is effective, or can be effective, in securing modal shift from the motor car, and thereby, in theory, easing congestion, reducing carbon emissions, and providing a viable public transport alternative. As we have seen in London and elsewhere, there is no question but that when we have frequent services and people turn up without having to think about the timetable, it drives passenger numbers up, creating a virtuous circle where buses become more attractive and more buses can be run. We have that in many parts of our country—not all, but in many parts—including much of London. However, it could be argued—this is one of the downsides of London, I might say—that sometimes, and it is my view, there is an over-provision of buses, which run significantly empty on occasions, back to back all the way along the road. That is a particular problem on Oxford street, as opposed to Oxford road.
It seems to me that the second purpose of a bus is to provide a social function and a necessary connection between those who are without private transport but need a bus to get to a school, a hospital, or whatever it happens to be. The hon. Member for Bolton West suggested that the answer was route-bundling, which is a perfectly legitimate philosophical view. However, I would say that route-bundling may satisfy her need for buses that go round the houses, but what is the consequence for Oxford road, or buses along high-frequency corridors? I am not sure that we can have both—perhaps we can. If we reduce high-frequency corridors to provide buses round the houses, that may meet more social needs, but it may secure less modal shift from road. I raise that philosophically to point out that such things are not perhaps as straightforward as they are sometimes presented.
Julie Hilling
I certainly had not taken my thoughts to the level of “Well, if you are going to provide a service here, you are taking a service off somewhere else.” For me, it is more about running the Oxford road service with that frequency, and alongside that, having another area of routes. Some will be highly lucrative and others less so. It is less about the distribution of resources, and more about saying, “Yes, we need to provide this service and those services.” It is not about taking resources away to provide them.
Norman Baker
Many of us, including me, would like to have our cake and eat it, would we not? “Eat our cake and have it” was, I think, the original English phrase, which makes more sense. If we can do that, fantastic, but I draw attention to the conundrum about the supply of buses and what is done with them.
The hon. Lady and the hon. Member for Blackley and Broughton referred to the costs of bus services in Manchester, and the hon. Gentleman made what might be termed “uncomplimentary comments” about FirstGroup. To be fair, I understand that FirstGroup recently reduced its weekly tickets to £13 from £18 in Manchester. FirstGroup tells me that initial signs are positive, with passenger growth levels ahead of 5% in just eight weeks, meaning that, so far, more than 300,000 bus journeys have been made on the reduced fares. It tells me that that is part of a long-term plan to rebase bus passenger levels in Manchester.
Assuming all that is correct, and there is no reason to think that it is not, it is a welcome development. I have often tried to persuade public transport operators that cutting fares can be useful in driving up business, and if that is what is being demonstrated by FirstGroup in Manchester, as it appears to be, it is a welcome development. I hope everybody would agree that it could potentially lead to more buses, cheaper fares and the creation of the virtuous circle that I referred to.
Julie Hilling
The Minister is being extremely generous in giving way. My understanding is that that experiment is in one part of the conurbation, and it certainly does not include services to Bolton and other parts. Hopefully, if that experiment is working for FirstGroup, it might consider bringing costs down across the conurbation.
Norman Baker
Precisely. If it is working, and it appears to be, it would be wise commercially to see where else it might apply. Doubtless, the people at FirstGroup are listening to this debate very carefully, and they will have heard the hon. Lady’s pitch for a similar scheme for Bolton West and elsewhere, no doubt, in the conurbation.
The hon. Lady asked what we would do to roll out something like Oyster. I can assure her that we are doing a great deal of work on smart cards, or smart ticketing—it is becoming difficult to get the right form, because we talk about mobile phones and everything else, and there is no simple phrase these days to describe all that. As a Government, one of the first things that we did was give a big sum of money to the various passenger transport executives to help develop smart ticketing in their areas, and we are giving other help as well. That money is forthcoming for rail and bus.
The hon. Lady asked what we would do to help Greater Manchester. I hope that we will do a great deal. We continue to work productively with the integrated transport authority up there. I am always very happy to meet its representatives and hear any concerns that they have. We have, in fact, given a great deal of money to Manchester for transport in the past two and a half years, including the beginning of the delivery of the entire northern hub, so I hope that we are doing a good deal to help transport in that area.
I was asked about data on bus spend. I am advised that DCLG collects some of those data and they are published as part of its annual statistics—not just on supported services, but more generally. On best practice, I think it is something that has value, but it is predominantly for the local government family in this new era of localism to identify that themselves. Of course, we are interested in it, and talk regularly to our local government colleagues and to the Association of Transport Coordinating Officers, for example. However, it is broadly my view that the Local Government Association needs to do rather more to step up to the plate and identify best practice, rather than simply seeing itself as a body that lobbies Government for something. In the new era of localism, it has a different role to play, which I hope it will develop rather more than it has done. We are helping local government in many ways, including through providing guidance for local authorities on tendering.
Graham Stringer
I have listened carefully to what the Minister has said. I feel that he is coming to the end of his speech, and he is being very generous in giving way and covering all the issues. However, I have not heard him answer the question asked by my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) about the deregistration of services, and whether he will legislate to ensure that, when services are registered, both ridership and fare information is made public.
Norman Baker
Let me muse on that matter for a moment—until I become inspired—and deal with the points made by the hon. Member for Nottingham South as part of my closing remarks. I have noted with interest her support—increased support, I might say—for quality contracts, and her proposal for bus deregulation exemption zones. The Opposition is of course entitled to produce its own policy and I look forward, with interest, to that evolving. Therefore, perhaps it would be churlish of me to point out that for 13 years, some of us were making such arguments and they were batted back and we were told that what we were proposing, which may not be terribly different from what she is now suggesting, was a load of old nonsense. It would, however, be churlish to make that point.
I do not think that it is true to say we are in a great cycle of decline. I say to the Opposition that there are issues about the bus industry that I have been happy to accept, including what some councils have done in terms of bus cuts and the real impact that has on individuals in those areas. However, I encourage her not to exaggerate the position. That “great cycle of decline”, as I mentioned yesterday, shows an increase in passenger journeys of 0.6% over the last 12 months. Even if we take out London, a decline of only 0.8% is shown. It is not a great cycle of decline, and we must not talk down the bus industry and the opportunities for users.
Lilian Greenwood
I want to clarify that they were not my words but those of Passenger Transport. Just this week, it expressed its concern about the impact of a number of things, including cost rises and funding cuts. It is not just me who has real concern about the future of the bus industry—that view is widely held—and I just wish the Minister would respond to it.
Norman Baker
I have responded to it, and I have indicated that we are not into a great cycle of decline. I indicated that commercial services are holding up very well. The bus industry is responding with ingenuity and innovation. It is taking steps to take over some of the services that have been tendered and that were run by councils. Indeed, it is beginning to grow the market in places. The initiatives in Manchester and Sheffield, where fares have been cut, shows us a way to grow the market. I do not accept that we are into a great cycle of decline; nor do I think that it is helpful for anyone, whether the Opposition, Passenger Focus or anyone else—whoever the hon. Lady happens to be referring to —to talk about these matters in such apocalyptic terms.
The hon. Lady said that buses had been cut completely in Hartlepool and that it did not have to be that way. No, it does not. She should perhaps ask Hartlepool council why things are that way there, because they are not that way in other councils.
The hon. Lady said that local authorities are best placed to provide leadership, and we entirely agree, which is why we are pursuing a policy of localism. However, I hope she will accept, as we do, that that will produce a non-uniform picture across the country, as local authorities behave in different ways as a result of the freedom that they have been given.
The hon. Lady says that Labour is committed to devolution, and I am delighted to hear that, because I did not notice much of it in the 13 years of the previous Government. However, if she is now going along with our localism proposals, that is very welcome. That sends a message that there will, I hope, be no reversal of the localism that the Government has pursued, in the unlikely event that Labour forms the next Government. That will give local authorities some comfort that the direction of travel will not be changed.
On deregistration, the hon. Member for Blackley and Broughton will recognise that primary legislation would be required and is difficult to achieve slots for. Alongside every other Department, we have to make a case to be given spare time to pursue the matter, so we are not looking to legislate. We are exploring voluntary options, but, as with all things, we reserve the right to introduce legislation if necessary. I very much hope that it will not be, and we are certainly getting quite a long way down the track on a whole range of issues by taking a constructive, engaging, voluntary approach with local councils and the bus industry.
Let me end on a note of agreement. I share the views of the hon. Member for Nottingham South about the hon. Member for Barrow and Furness (John Woodcock). I very much understand why he has taken his decision, and we all wish him a full recovery and a speedy return to the Front Bench.
Mrs Ellman
It is a pleasure to serve under your chairmanship, Mr Bone. I thank the Minister for his full response. I note his positive approach to many of the issues that have been raised, and I acknowledge the positive support that he has given the bus industry, in so far as he has been able to do so within the constraints of Government policy. I look forward to pursuing these issues and particularly how we can enable local authorities that wish to become involved in statutory partnerships to do so. The Committee will pursue these issues further. I thank the Minister for his positive approach.
Question put and agreed to.