[Mr Gary Streeter in the Chair] — Bus Industry

Part of the debate – in Westminster Hall at 9:58 am on 6th September 2011.

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Photo of Mike Weatherley Mike Weatherley Conservative, Hove 9:58 am, 6th September 2011

I congratulate Graham Stringer on securing this debate. Although passenger numbers are on the decline throughout the country, I understand that buses remain the most popular form of public transport. Usage is on the increase in Brighton and Hove, which bucks the national trend.

In the city of Brighton and Hove, which includes my constituency of Hove and Portslade, we are fortunate to have a good bus service. We benefit from a network of many routes, frequent buses, and well-maintained bus shelters. I pay tribute to the managing director of Brighton and Hove Bus and Coach Company, Roger French, for his excellent management of the network in previous years. Increasingly, the company has been able to make use of new technology, such as real-time information screens at bus stops and smartcard readers on buses. While that is great news for residents of Brighton and Hove, I would argue that more competition is needed to protect the interests of bus passengers in future.

The Brighton and Hove Bus and Coach Company is owned by Go-Ahead, one of the five biggest bus service providers that together account for 69% of the country’s bus services. In areas such as my constituency, where one company operates over 95% of the public bus services, not much can be done when fare rises are proposed, as will happen later this month. Passengers cannot go elsewhere to get a cheaper ticket.

More competition would go some way towards maintaining best value for consumers and continue to keep pressure on efficiencies. As the situation stands, however, the many barriers faced by new companies that are setting up bus services effectively restrict competition. Although in theory schemes are open to all companies that wish to take part, the costs of doing so are so prohibitively high that in practice they are open only to large companies that can afford to take part. A case in point is the real-time information system. Electronic display boards are now located on most bus stops in the centres of Brighton and Hove and provide real-time information about bus times. I have witnessed at first hand the system in operation at the Brighton and Hove Bus and Coach Company’s operational centre, and it is very impressive. The system is open to all bus operators, but only if they pay substantial costs for the on-bus radio system, transponders and any necessary back-office equipment.

Some charges levied on transport companies are implemented in a way that penalises small companies. Although some charges vary according to the number of vehicles a company operates, meaning that larger companies pay more, other charges are fixed irrespective of size. Such fixed charges mean that small companies effectively end up paying a higher proportion of their income than larger ones. Charges for the registration of a public service, for example, or an application for an operating licence or a transport manager’s certificate of professional competence, are the same regardless of the size of the company or the number of routes and buses involved, meaning that larger companies can absorb the cost more easily.

In my constituency, there is a small bus company called The Big Lemon that runs its buses on waste cooking oil from local restaurants. It has been beset by problems as a result of being a smaller company, to the extent that, as I understand, it has had to submit evidence to the Competition Commission and the Office of Fair Trading in order to protect its interests and, ultimately, to prevent it from being forced to cease operations. Fare increases have recently been announced by the Brighton and Hove Bus and Coach Company, and much has been made locally of the scale of those increases. In some places, fares will rise by as much as 20% and on most routes a return fare will cost as much as £4. However, on routes where The Big Lemon is in direct competition with the Brighton and Hove Bus and Coach Company, the fare will be only £2.50. That means that passengers in some parts of the city will pay 60% more than in other areas where competition has forced competitive pricing.

The Brighton and Hove Bus and Coach Company has stated that the fare increases are being introduced to reflect the rising price of fuel. However, as the managing director of The Big Lemon, Tom Druitt, pointed out, fuel does not cost more on different routes, and the difference in price seems designed to stamp out the competition represented by the smaller company. The Big Lemon also encountered a barrier to extending competition in the city when it attempted to join the quality bus partnership. As I understand it, that partnership is an informal agreement between the Brighton and Hove Bus and Coach Company and the council, and is not open to other companies or routes at present. The Big Lemon has also encountered difficulties in publicising information and timetables. It found that priority for such matters was given to the Brighton and Hove Bus and Coach Company, with the main information about fares and timetables on the council’s website referring to services provided by the larger company. Smaller providers are mentioned and a link to their websites is provided, but the main emphasis is on the Brighton and Hove Bus and Coach Company. That situation could easily be rectified at no cost to the taxpayer, and it would encourage competition.

The attitudes and actions that I have mentioned are obstacles to increasing competition. If one small company has encountered such difficulties, how many more companies are experiencing problems around the country? Bus companies that benefit from large Government subsidies naturally have an advantage that small start-up companies do not have. In my constituency and across the city, the Brighton and Hove Bus and Coach Company receives a large subsidy from the city council—money that would make a huge difference to small operators such as The Big Lemon. There is a compelling argument that we should encourage the distribution of subsidies on so-called loss-making routes towards new, smaller, innovative companies, thereby increasing competition and benefiting passenger choice and transport quality in Brighton and Hove and beyond. As councils do not have direct control over the fares levied by bus companies, that is one way in which greater competition in bus services could be encouraged.

As mentioned earlier, there are other ways in which the council could assist in making the market more competitive such as providing fair website information and the quality bus partnership scheme. In summary, I would like to see measures implemented that are focused on delivering sensible competition and a code of practice that would put new operators on a level playing field, thereby reducing barriers to entry in the market.