[Mr Gary Streeter in the Chair] — Bus Industry

Part of the debate – in Westminster Hall at 10:33 am on 6th September 2011.

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Photo of Norman Baker Norman Baker The Parliamentary Under-Secretary of State for Transport 10:33 am, 6th September 2011

I thank Graham Stringer for raising this important subject and doing so in his usual measured and thoughtful way. His knowledge is considerable, as I discovered when we served in Committee on the Local Transport Act 2008. I am delighted to have rather more time than I thought I might to respond to the debate.

The Government are committed to supporting local bus services and markets through concessionary travel reimbursement, direct operator subsidy and our funding of local government. However, as I have made clear before, with those significant amounts of public expenditure invested in the bus market, it is only right to consider whether it is delivering the best service for bus passengers and best value for the taxpayer. The Competition Commission has identified, in its provisional findings, aspects of the local bus market where competition is restricted, prevented or distorted. That cannot be good for passengers if it means that they enjoy less frequent services and have to pay higher fares as a result. If that in turn means that fewer people are able to make use of their local bus, and instead have to travel by other means or cannot travel at all, that has wider, and unwelcome, societal and environmental impacts.

Of course, bus markets are local in nature. Many of the effects will be localised, and I have encouraged the Competition Commission to set out where and in what circumstances it believes competition is failing to materialise. It is important that it should be specific in its comments in the final report. One of the concerns raised by the Competition Commission, which I share, relates to profitability—a point raised by the hon. Members for Blackley and Broughton and for Hartlepool (Mr Wright). Excess profitability is an important indicator of ineffective competition. Evidence commissioned by the Department for Transport suggests that profits are particularly high in the largest metropolitan areas, so I have asked the commission to consider whether it can identify specific areas where ineffective competition is most prevalent. A key test of potential remedies will be whether they result in more people travelling on buses and bring about wider benefits to society by helping to create growth and cut carbon emissions.

The inquiry is ongoing, and with representatives of local government and passenger and bus operators, my Department continues to engage with the commission as it prepares to publish its provisional remedies later this month. Hon. Members will understand why I do not propose to anticipate those remedies in my remarks today: it is important that we let the commission, as an independent body, come to its conclusions on the basis of the evidence placed before it. However, I will take this opportunity to respond to the points raised during this debate.

The Local Transport Act 2008 made changes to the provisions of quality contract schemes and partnerships and introduced new forms of legal partnership working. It came into force only in 2009, and the Competition Commission has indicated that quality contracts and quality partnerships may be remedies for the competition problems that it has identified. It is therefore sensible to wait for the final outcome of the inquiry at the end of the year before deciding whether further changes to the regulatory regime are needed.

The hon. Member for Blackley and Broughton asked about the coalition policy as it relates to the 2008 Act. It is on the public record and therefore no secret that the two coalition parties, when in opposition, had differing views on the Act. The Conservatives were more sceptical about the value of quality contracts than were the Liberal Democrats. When the coalition was formed, the decision was taken that, as the process was already under way, the sensible course of action was to wait for the Competition Commission to analyse the market and produce its findings, so that we could proceed on a sound basis, free of prejudice, relying on proper analysis and collated evidence. That remains the position. I do not accept that that is agnosticism—the term used by the hon. Gentleman. It is a sensible decision to wait for the evidence, at which stage we shall analyse it internally and decide what action, if any, we should take in response to the findings of the commission. That process is under way in relation to the structure and landscape of the market.

The hon. Gentleman no doubt expects me to make the point that the landscape about which he and his colleagues complain is largely the one that their party’s Government created, which we inherited. He and the hon. Members for Hartlepool and for Denton and Reddish (Andrew Gwynne) will also be aware that it is on the record of the Local Transport Bill Committee that, had the amendment that I tabled been accepted, many of the actions that Opposition Members now ask for would be unnecessary—the measures would already be law. We did not make more progress at that time because of the then Government’s reluctance to go further.

Before the Competition Commission report is published, however, I want to encourage joint working between bus operators and local authorities. We have seen good results, with local authorities and operators working effectively in partnership to improve bus services in places such as Birmingham, Brighton and Oxford.

My hon. Friend Mike Weatherley and I are lucky in having good bus services in our area. I too pay tribute to Roger French, who has been most effective in driving up bus patronage. He has shown that it can work and that the moaning Minnies who say that bus patronage is going into decline are wrong, as the examples of Brighton, Hove and other places prove. My hon. Friend complained about the effective monopoly that operates in Brighton and Hove and the difficulties faced by the Big Lemon service; he clearly wants to give the Big Lemon aid in some form. The monopoly of which he complains is not terribly different from that which the hon. Members for Hartlepool and for Blackley and Broughton complained about. One operator having an 85% to 90% market share inevitably makes it difficult for other companies to enter the market, and it can be difficult to challenge. My hon. Friend is right to say that the cost of fuel does not relate to the route on which is it used and that differential pricing is clearly a result of competition along those routes. The absence of competition clearly enables Brighton and Hove to charge a higher rate for its bus services. That is a striking example, but I shall ask my officials to ensure that the entire report of our debate is passed to the Competition Commission so that it can see what has been said and take it into account, albeit quite late in its deliberations.

I want to encourage more of that sort of partnership activity so that bus passengers get the services that they deserve and expect. More partnerships need to tackle punctuality, which is the No. 1 priority for passengers and which can be compromised by any number of issues, from road works to poor planning. It is not clear whether the 81% punctuality figure referred to by the hon. Member for Hartlepool was the result of a failure of the bus company or of, for example, congestion, which is a problem for the local authority. Punctuality is not a matter only for the bus companies; there is also a local authority aspect. That demonstrates the need for authorities to be fully involved and to work sensibly with bus companies in their areas.

The Government are looking for operators and local authorities to work in partnership, sharing punctuality and traffic management data to benchmark and improve performance. To facilitate this, a significant number of Vehicle and Operator Services Agency examiners are being trained to engage proactively with operators and local transport authorities to ensure that proper procedures and lines of communication are in place. That new approach is being introduced gradually and has been in place in the north-west since June. I assure hon. Members that traffic commissioners will continue to take effective enforcement action when performance is poor, and that any lessons learned from the north-west will be absorbed before full roll-out takes place. The hon. Member for Hartlepool may want to contact his local traffic commissioner if he is concerned about punctuality in his area.

As the hon. Member for Blackley and Broughton said, another important concern for passengers is integration, especially in fares and ticketing. I share his view that what he described as a simple fare and ticketing structure, with through-ticketing, can be effective in driving up passenger numbers. I absolutely agree and the Department is focusing on that aspect. My vision is of seamless end-to-end journeys, with tickets being available at a decent price and being valid on all services in a city, not only those of the dominant operator.

I shall continue to encourage the development of integrated multi-operator ticketing schemes, and my officials are actively engaged with the Competition Commission and bus operators in helping to remove barriers to their successful implementation. I firmly believe that bus tickets should be valid with more than one operator, but they should also be valid over much wider areas and easy to use. That will be of clear benefit to passengers. That is why I am committed, with operators and public sector bodies, to delivering the infrastructure necessary to enable most public transport journeys to be undertaken using smart ticketing by December 2014.

In many places, including in Greater Manchester and other large metropolitan areas, smart ticketing is already being introduced by local authorities and major national bus operators. It is fuelled by the smartcard incentive offered by the Government through the bus service operators grant and other pump-priming schemes that we have offered since the election. The hon. Member for Blackley and Broughton referred to the use of BSOG, saying that there was a better way of targeting it. If I understand him correctly, he believes that it may be more effective to hand it to local authorities to be used for general transport uses. However, it is difficult to square the complaint that the money being made available for buses is diminishing with the argument that what is available should be deployed for wider transport purposes.