Bus Services (No. 2) Bill [ Lords ] (Second sitting)

Amanda Hack Excerpts

Committee stage
Thursday 26th June 2025 Public Bill Committees

[Jerome Mayhew]

Clause 7, which is reasonably long, introduces a number of additional tests for the granting of service permits. Subsection (2) inserts a new subsection (5A)(a) and (b) to section 123Q of the Transport Act 2000. Paragraph (a) provides that the franchising authority or authorities may grant a service permit for a cross-boundary service—this is the meat of it—if satisfied that

“the benefits to persons making the journey on the proposed service will outweigh any adverse effect on any local service that is provided under a local service contract in the area to which the scheme relates.”

Paragraph (b) sets out that the franchising authority or authorities may grant such a service permit if they are satisfied that

“the benefits of the proposed service to the economy of the relevant area”—

that is different from paragraph (a), which referred to benefits to persons taking the journey—

“or to persons living in that area, will outweigh any”

adverse effect on the local service provided under a local service contract. The first paragraph refers to the benefit to passengers on the cross-boundary service and the second to the benefit to the area.

I suppose what sits behind this is the abstraction argument, which we are familiar with from the railway. In fact, those lucky enough to be at Transport questions this morning will have heard a brief rehearsal of that argument by the Secretary of State in respect of open access applications on the railway. The essence of the argument is that when a new service is proposed for a particular area, in addition to just saying, “Isn’t this is a jolly good idea? We’re getting further provision, more choice and no doubt price competition as well, and new constituencies and demographics being served by buses”—or, in the other example, by rail—before agreeing to it, we need to look at its impact on existing services. It is argued that it would be unfair if we have already contracted a franchise agreement or service operation agreement for buses, or we have a franchise operator on the railway, such as London North Eastern Railway—actually, that is not a good example, because it has open access competition. Let us take High Speed 1, where Eurostar has its operations, and imagine that we said, “We’re going to provide a new service.” Virgin, for example, is applying for an operating licence for HS1. We would then say, “What would be the impact on the provision of the existing services? Is this new service going to supply a currently unmet need, or is it going to provide two services fighting over the same customer?”

That takes us back, interestingly enough, to the original regulation of bus services in the 1920s. A major argument for the need for bus regulation in the first place was the common complaint that there could be one route with 15 different buses on it, all from different bus operators competing furiously for a key route, and for the less well-travelled routes and perhaps the suburban or rural routes, there would be no bus provision at all. The argument ran that we could not leave it up to the private sector to fight it out and let the market decide where services should be provided; we needed a degree of regulation so that we could have decent provision on the main thoroughfare and provision elsewhere. I think I am right in saying that the term “traffic commissioner” was first created following the review in the 1920s, and those commissioners still exist to this day. As we progress through the Bill, we will see reference to the traffic commissioner, which is a historical overhang from the initial regulation of the bus network in the 1920s.

I return to abstraction. The argument goes that it would be unfair to provide a new service where the impact of that would be negative on existing services or on other factors in a local area. The Secretary of State’s argument—admittedly in the context of rail, but it is relevant to this argument—is that it would be unfair to provide such a new service, but I challenge that base assumption. The person who is being left out of that consideration is the passenger. New services provide new opportunities for the passenger. Yes, it is true that new services may act as de facto competition for existing service providers, but as we know from every other aspect of our lives, competition tends to improve performance.

Before I came into Parliament, I was a businessman running a consumer-facing company. I hated competition, and I did everything I could to stifle it, because I knew the impact it would have. I will not tell the Committee the things I used to do—I should think there would be a by-election—but the point is that existing providers hate competition, because they have got a comfy little operation, they know what their activities are, they know what their likely revenue will be, they know how they deal with their customers, and they do not like change.

When competition comes in, businesses are forced to sit up and say, “Oh my goodness! This is an existential threat to us as an operator. How are we going to respond?” Businesses in aggregate respond in a number of different ways. Some of them are nicer to their customers and improve their customer service to hang on to their customers and ensure they are not tempted across by the new provider. Others reduce their fares to attract custom. Then we get a price war, as we often read about in the press—we get price wars between Tesco and Asda, and Lidl and Aldi. Those who benefit are not the businesses but the customer, who gets either better customer service or lower prices. They certainly benefit from wider provision of opportunity, because they have two services available to them instead of one, and that puts the providers on their mettle.

My submission is that new provision of whatever description is inherently a good thing, even if there is an argument about abstraction from existing providers. I suppose it comes down to the core beliefs of Government Members as opposed to Conservative Members, who at heart—my heart, anyway—believe that competition and the challenge of a competitive market is a good thing. In the vast majority of cases—not always—it brings benefits to the customer and forces a focus on the end user rather than the supplier.

If I were to traduce Labour Members’ political opinions—perhaps I am putting words into their mouths—my criticism of the Labour party more widely and its approach to legislation as demonstrated in this clause is that its instinct is to support the supplier and the operator, rather than the customer, particularly in heavily unionised sectors. We touched on this point a little bit in our last sitting on Tuesday, when I was discussing the Bee Network in Greater Manchester and the decision on whether to increase the hourly rate for bus drivers.

At the time when the contract was being let, the commercial rate was £12.60 an hour. The Mayor for Greater Manchester insisted on an hourly rate for bus drivers of £16 an hour. I rehearsed the arguments both for and against. We can look at it in two ways—we can think it is a wonderful thing that bus drivers are being paid more, but it also means that bus services are considerably more expensive to provide in Greater Manchester than they are elsewhere in the country because salaries—wages—are more than 60% of the costs of running any bus operating business. That is the heart of it. Who are we after? Are we supporting the suppliers or are we supporting the customer—the passenger?

That brings me to amendments 46 to 50, standing in my name. Amendment 46 would have the effect of removing the requirement in section 123Q(5)(b) of the Transport Act that

“the proposed service will not have an adverse effect on any local service that is provided under a local service contract in the area to which the scheme relates.”

Given my preceding comments, we can see why this is so important. As it currently stands, we have a measure that prohibits the provision of a new service if that service were to have any adverse effect on pre-existing services under a local service contract in the area to which the scheme relates. That is a very low bar—it is almost a veto—for the provision of new services, because one can imagine that it is very easy to assert that the provision of a new service may draw customers away from one that is already being provided.

The amendment seeks to simplify the process for granting service permits. Demonstrating that a change will not have any adverse effect is an enormously high bar and is evidentially onerous. Removing section 123Q(5)(b) from the Transport Act, as the amendment would do, speaks to the Government’s desire to streamline the process and make it easier for the supply of new services, for innovation, and for new entrants to enter the market.

[Amanda Hack (North West Leicestershire) (Lab)]

The shadow Minister raises an important point about competition and the customer being at the heart of bus services. Will he share with us why so many rural bus services have been cut, if the commercial operator is king and the focus is on customers? That is not the experience we feel in rural communities. We have had cut after cut.

[Jerome Mayhew]

That is an interesting point, and the hon. Member is of course quite right. I did preface my comments by saying that competition is beneficial in most areas, but there are some areas where it is not. The counter-argument is that, in this instance, this is about a new operator, which does not have to be a private sector operator, suggesting an additional service. This is not about cutting services. This is about where, for whatever reason, an analysis has been done that there is additional demand—this is not about cutting a service, but about providing an additional service.

The hon. Member is quite right to raise rural areas, as the hon. Member for North Norfolk has done through a number of his amendments. I represent a rural constituency myself in Norfolk. In bald terms, the rural service in Norfolk is not too bad as long as the destination is Norwich. We have a radial provision of bus services from outlying villages directly into Norwich. If someone wants to go across the county to anywhere other than Norwich on those lines, it is very difficult. The hon. Member for North West Leicestershire is right that if we look to only the passenger ride and the fare box to support usable and sufficiently frequent services, it is highly unlikely that a purely commercial approach will do it. That is why, in Norfolk and many other places, the innovation of an advanced partnership has worked so well.

--- Later in debate ---

[Joe Robertson]

It may be tempting to think that the shadow Minister was particularly detailed, lengthy and comprehensive in his earlier contribution, but from where I was sitting, he was all too brief. There were a great range of issues that he failed to address, and I feel it is my role to address them.

Before that, I will agree with what the hon. Member for North Norfolk said about different companies providing services to similar or the same destinations, where using one service in one direction means that another service in the other direction cannot be used. Unfortunately, the Government are currently unpersuaded that that is a problem for ferry services to the Isle of Wight, which is a shame, given that the Government—I agree with them on this—are reforming public transport. I will, however, save that debate for another time.

It was good to hear some genuine philosophical disagreement between the shadow Minister and the hon. Member for Brighton Pavilion. I am sure that the hundreds of thousands—possibly millions—of members of the public listening to this Bill Committee will have noticed that it was done in a polite and respectful way. I think the shadow Minister almost went too far at one stage, and I was nudging the hon. Member for Brighton Pavilion to intervene—even though she is a Green MP and I am a Conservative—because I think she missed an opportunity to fight back, but maybe she will in a later sitting.

I will make a few brief points on the principle, but they are anchored in amendments 46 and 50. They concern the idea that assessing whether a new proposed service will have an adverse effect on a current local service is slightly academic, contested and possibly futile, especially if we add in the possibility that, although the analysis and conclusion may have been done in good faith, they will not translate when a service is brought into effect and the market is tested.

I therefore completely support the shadow Minister’s amendments seeking to get rid of the analysis of an adverse effect. It is entirely possible that an element of the service could be adversely affected by the introduction of a new service. To some people, that is a net gain; to others, it is a net loss. Who is to say which of those competing groups is more important than the other?

I have a completely hypothetical example. The local economy of my constituency is heavily reliant on tourism, but people also use buses to get to work and my older constituents rely on them for their daily movements, such as going shopping, visiting friends or going to appointments, including at the hospital. We could end up with a bus franchising proposal that has a net positive effect on moving visitors around between the key tourist areas. That may have an overall positive effect on the economy—on paper and maybe in reality—and that effect may trickle down and raise the prosperity of the whole area. However, that proposal could also have a negative effect on the older population, who need bus services to move around year in, year out. They do not need to travel to the key hotspots that drive the tourist economy, but to GP practices and shopping areas, and not tourist shopping areas but those that provide essential goods for residents, particularly older residents.

That example poses a very legitimate question: is it more important to provide a service that leads to a general raising of the economy and wellbeing by improving tourism, which some might say has a trickle-down effect on everyone, including older residents, or is it better to protect people who are more vulnerable and who have fewer opportunities, if any, to use a different mode of transport? People could come to fair but different conclusions about that.

Whether a proposed new service will have an adverse effect on a local service is an unanswerable question, and it cannot be fitted into an assessment. If an assessment can be made at all, it will be entirely reliant on subjective, statist, planned, expert-led analysis. One can only hope that a conclusion drawn from that analysis would translate into the real world and be correct, but it is entirely possible that it would not.

[Amanda Hack]

The hon. Gentleman’s analogy ignores the passenger transport strategies that local government should already be undertaking, and the fact that local government already does a large piece of work to make sure that those strategies are relevant to the local economy. The Bill gives local government the opportunity to get the funding—that has not been mentioned—to start making bus services feel like what the local population and economy actually need.

[Joe Robertson]

I agree with the hon. Lady, but of course, it is more complex than that. Obviously, a local strategy will and should sit at the heart of any decision making, but there are great challenges in assessing whether a new service is fundamentally having an adverse effect on an existing service. Even approaching it in that way slightly negates the idea of holistic planning—rather than considering whether a new service conflicts with an existing service, we should be treating them both as one service.

Ordered, That the debate be now adjourned.—(Kate Dearden.)