[Mr Gary Streeter in the Chair] — Bus Industry

Part of the debate – in Westminster Hall at 10:17 am on 6th September 2011.

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Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Transport) 10:17 am, 6th September 2011

I congratulate my hon. Friend Graham Stringer on securing this very important debate, as I know that he has taken a keen interest in these issues for a number of years. I welcome the chance to contribute to the debate from the Opposition Front Bench. It is a pleasure to see you in the Chair, Mr Streeter.

On the specific issue of competition in the bus industry, we need to examine the deregulation of the buses to understand how we have ended up with the current situation. As my hon. Friend outlined, it is now 25 years—almost to the day— since the deregulation of the bus industry outside London. Of course, in London, Transport for London, which is accountable to the Mayor, specifies in detail which services are provided. It decides the routes, timetables, fares—everything down to the colour of the buses. The services themselves are operated by private companies through a competitive tendering process, but there is no on-road competition.

In the rest of the country, such as in the Greater Manchester constituencies that my hon. Friend and I represent, there is, in theory at least, a free market, so anyone can start up a bus service as long as they meet minimum safety and operating standards. Bus operators are practically free to run whatever services they like, charge whatever fares they like and, as we saw with the UK North debacle in Manchester, use whatever vehicles they like. Monitoring and regulation of reliability and vehicle cleanliness is largely minimal. Although it is supposed to be a competitive market, the majority of services are provided by just a few bus companies. As my hon. Friend correctly outlined, the vast majority of commercial services in my south Manchester constituency are operated by Stagecoach, in contrast to his north Manchester constituency, where the predominant provider is First. Local authorities will fill the gaps where there is an inadequate commercial service, and such local authority-funded routes are operated by private companies through a competitive tendering process.

My hon. Friend was right to raise concerns about how some of these big companies play the deregulated system. In 2004, before I came to the House, I was a local councillor on Tameside metropolitan borough council. Just before the general election in 2005, Stagecoach Manchester removed the well-used 375 bus service, which used to link Stepping Hill hospital in Stockport, Stockport town centre, Denton, Ashton town centre and Tameside general hospital. That service between the two district general hospitals was an important link for the communities along the route.

The route was commercially viable, making about £50 a week profit, but it was never going to make Stagecoach Manchester a lot of money. Nevertheless, it was a commercial service, it was commercially viable and it made a profit, albeit at the margins. However, Stagecoach decided to withdraw the service to the two district general hospitals, so that the route went only to Stockport and Ashton. Anyone who wanted to go to the hospitals had to get on another bus at Stockport bus station or Ashton bus station.

Stagecoach then decided to split the new service in two. The 375 became the 317A and the 317B. In the middle of the route, people had to get off one bus and wait for the next one to arrive. That made the service non-profit-making overnight. There was no change to the route, but splitting it in two meant that it was not commercially viable. Stagecoach therefore went cap in hand to the Greater Manchester passenger transport authority for not one public subsidy, but two. That highlighted loud and clear how Stagecoach Manchester played the system, turning a service that was profit-making—albeit marginally—into two subsidised services, which is outrageous.

Across the country, the picture on deregulation is mixed. In some areas, services have undoubtedly improved, as we heard from Mike Weatherley, and some bus companies have invested in new bus fleets. In many areas, however, it is fair to say that deregulation over the past 25 years has resulted in a much worse service, which costs taxpayers and passengers alike much more. Figures produced by the Passenger Transport Executive Group on behalf of the passenger transport executives in the six metropolitan conurbations outside London show that bus fares have increased by 94% in those areas in the years since deregulation, while the number of those using buses has fallen by 46%. In some PTE areas, the decline has been even greater, with ridership down by 65% in South Yorkshire since deregulation.

Deregulation has had a number of other negative knock-on effects. It is much harder for local authorities to put in place long-term bus networks or to properly integrate bus services with other transport modes, such as rail and light rail, particularly where those services are operated by competing businesses, as in north Manchester, where, until recently, the trams were operated by Stagecoach and the buses were predominantly operated by First. As my hon. Friends have said, deregulation also makes it much more difficult to provide a competitively priced multi-modal ticketing system like the London Oyster card.

One of the more worrying aspects of the changes is the effect on socially necessary bus services, as we heard from my hon. Friend Mr Wright. There has been a gradual reduction in off-peak and lifeline estate services, with more focus on more profitable major bus routes. In a market-driven environment, commercially driven bus operators will of course concentrate more on the more profitable commuter routes and less on socially necessary services. With the scope for cross-subsidy removed, the cost of the diminishing subsidised network has increased massively—