CARRIAGE SERVICES COMPETING WITH OPERATORS HOLDING ROAD SERVICE LICENCES

HC Deb 24 March 1980 vol 981 cc953-93

"No express service or contract carriage service shall operate on a route which is served by public service vehicles operating under a Road Service Licence and supported by a transport supplementary grant and/or cross-subsidised under a passenger transport policy network agreement unless in the cases where cross-subsidy applies the agreement of the Traffic Commissioner is obtained and in the cases where transport supplementary grant applies the agreement of the local authority is obtained.".—[Mr. Booth.]

Brought up, and read the First time.

Mr. Booth

I beg to move, that the clause be read a Second time.

The clause deals with a matter which is at once complex and far-reaching and relates to one fundamental issue. That issue is whether it is possible, within the combined effects of the Bill in terms of its delicensing, its definition of express service, its opening up of contract carriage, for local authorities to carry out their statutory duty to promote and coordinate efficient public transport systems within their areas.

We hold that these combined effects will prevent local authorities from doing that. We also believe that, in order to rescue something from the devastating effects of the Bill, our new clause is necessary to inject into the much wider system of free enterprise operation a method of check and agreement as between local authorities and operators, and as between traffic commissioners and operators about what is necessary to maintain network and individual services where they are being supported by transport supplementary grant.

As the Bill is now drafted, it would be possible for someone to set up a contract carriage operation within an area covered by a networking agreement. Even though the public are making their contribution to that agreement through the transport supplementary grant, and even though major operators in the area are making their contribution by cross-subsidisation as between their profitable and unprofitable routes, along could come another operator who could cream off certain of the profitable routes without regard for the effect that that would have on the public transport service, which is a statutory concern of the local authority, or for the public interest which is at the root of the statutory duty imposed on traffic commissioners.

A great many services in local authority areas are making a valuable contribution to maintaining other services within those areas. Urban services are making a contribution towards rural services. Monday to Friday services are making a contribution towards Sunday services. Peak hour services are making a contribution towards slack hour services.

The whole of our public transport network is based upon a complex balancing of financial factors that allow services to run on the basis of a mixture of considerations. There is the consideration of how much should be properly taken from one route to support another. There is the complicated consideration of how much taxpayers' and ratepayers' money should be provided to operators through supplementary grants for them to operate services that the local authorities consider necessary if they are to carry out duties laid upon them by Parliament to promote and co-ordinate efficient public transport systems.

Many hon. Members are aware that the emphasis on the promotion of services needs to be highlighted. There are still too many areas which, several years after the introduction of transport supplementary grants, have not succeeded in promoting services on a considerable number of routes. There are still many people who complain bitterly about their difficulties in getting to work or attending social functions because of the absence of public transport in their areas.

It is our experience that even after a few years of those statutory duties and of local authorities receiving transport supplementary grants, far from having an over-provision of public transport services, we are still suffering an under-provision. Those local authorities, shire county authorities and metro-county authorities that have been successful in bringing about an expansion of public services by promoting and co-ordinating the various transport operations are in a minority. Many have been struggling to hold together an existing system.

Under the provisions of the Bill, a contract carriage operator will be able to take advantage of a lucrative end-to-end route that is being served by a stage carriage service for which a road licence has been obtained, and will be able to operate only at peak hours, and on Mondays to Fridays, or possibly Saturday mornings. He will be able to do so only on those identifiable occasions when it is profitable, and he will be able to cream off money from the route and leave the existing operator to carry out that part of the networking operation that is essential if it is to stand as an operation that can be fairly described as a co-ordinated, efficient public transport system.

If that happens, we predict that we shall be presented with a number of unpleasant options. Local authorities may tell the Government that they can sustain the operation of bus services—in some cases train services that are supported under the transport supplementary grant system—only if considerably greater contribution can be made. They may tell the Government that they cannot continue sustaining services at the required rate.

4.15 pm

Another possibility is that the network operators will tell local authorities that they can no longer make the network agreement or the contribution from cross subsidy required to sustain the network. They will say that they are not prepared to work on that basis. Some local authorities are prepared to play the game by either set of rules. However, at present, operators cannot use one service to cross- subsidise another and simultaneously compete with that service. They can do one or the other.

Having talked to a number of operators, I suspect that in those circumstances they will pull out of the non-profitable routes. They will say that the TSG support is about one-third of the subsidy that is required, and that they are having to find two-thirds or more by cross subsidy. They will not be prepared to give up the routes where they are now making a profit, even though they are using the profit largely for cross-subsidy purposes. They will pull out. They will cut fares on the few routes that are profitable—10 per cent. of the routes at most—and the overwhelming majority of services will close down. That type of contract carriage operation has not been envisaged previously. Up to now all contract carriage law has covered specific types of operation.

Another threat that looms large is that of the new definition of the express services. Any operator who is prepared to run a 30 mph or faster service can do so without road service licensing approval. There is much argument about the length of express operation—25 miles, 30 miles, 35 miles or 40 miles—that will affect the ability of the major operators to make a contribution from their carriage operations to other services. The National Bus Company estimated that a difference of five miles would affect its income by about £5 million.

Under new clause 6 we are pressing for a minimum that is required to bring about reasonable protection of the operations. We are not saying that a new operator should not be able to operate on a cross-subsidised route. There may be cases—this will appeal particularly to the Minister—where local authorities will welcome a new operator on a cross-subsidised route. They may find that a new operator is prepared to operate a substantial part of the service with a lower degree of subsidy. That will be welcomed with open arms. However, where the route is at present subsidised under the TSG arrangements, the local authority concerned must be consulted. Public money is being used to provide a service, and if a new operation can lead to the use of that public money in such a way as to provide as good or better services, with no more, or possibly, less subsidy, it is to be welcomed. However, it is feared that in many cases a new operator will not want to discuss that with the existing company, the traffic commissioners or the local authority, because he will want to operate in a way that does not take into consideration this major factor, which the House has decided must be a responsibility for local authorities.

I cannot believe that Members of Parliament would seriously wish to pass legislation which would require the majority of operators on stage carriage routes within their constituencies to go through a road service licensing procedure which took account of the public interest through reference to the traffic commissioner and the considerations which he would apply to road service licences, as well as the local authority's careful regard to the provision of taxpayers' and ratepayers' money to operators in order to maintain a network, and at the same time wish to make it possible for a number of others to operate with total disregard for those major factors. To do that would be to make nonsense of the whole business which we are about.

The Bill is an unhappy mess in this respect. It aims at two completely different objectives, and one so badly conflicts with the other as, in my view, to threaten the destruction of a good passenger transport system in a large number of areas.

I believe that this new clause provides a mechanism which allows a fair balance of the considerations involved, allowing an operator who is carrying out a desirable cross subsidisation—which was desirable in the view of the traffic commissioner and was taken into account in the determination of his road service licence—to say to the traffic commissioner that he believes that the effect of having contract carriage operation over certain parts of his routes at certain times, would not only be detrimental to his maintaining those routes but would in fact require him to withdraw.

A traffic commissioner who has granted a road service licence, having looked carefully and in detail at how far that licence and its form and conditions met the public interest, is, I believe, in a better position than are others to judge the effect of having contract carriage operation on such a route.

It could be held that the operator is biased about it. It could even be held in certain circumstances, though I would not so contend, that local authorities may be somewhat partial in their attitude towards certain routes, having run their own services or having made arrangements with particular operators. But that cannot be said of the traffic commissioner.

I believe, therefore, that the new clause is of great importance. It offers, as it were, a last chance for us to try to inject some logic, common sense and balance as between the express or contract carriage operations which at present are totally outwith road service licensing and the role of the traffic commissioner. It gives an opportunity to local authorities which have the statutory duty to try to promote good public services and which are spending public money for that purpose to be involved in agreements with those who will operate on routes which, under the proposals in the Bill, can be operated without any regard to these major considerations of the public interest.

Mr. Iain Mills (Meriden)

During the 110 hours of our work in Committee, when the right hon. Member for Barrow-in-Furness (Mr. Booth) and his hon. Friends spoke in those grindingly long debates, this question emerged, to a large extent, as the greatest divide between us.

As I understand it, the right hon. Gentleman's argument is summed up in the belief that cross subsidisation is somehow a beneficial system which will result in the provision of services which otherwise would not be provided. In examining that argument, one has to look at the reality of services in Britain today. I find it strange that the right hon. Gentleman did not remind the House that in every county, every district and every area public bus services are declining.

Mr. John Prescott (Kingston upon Hull, East)

This is the second time that the hon. Gentleman has made that assertion, and it is not true. Let him make the comparisons and look at the facts, especially in the metropolitan bus authorities compared with the counties or, indeed, look at the facts even in Tory metropolitan areas. He will see that both the South Yorkshire and Newcastle areas, for example, have been increasing the number of people travelling on their buses.

Mr. Mills

I hope that the hon. Gentleman will recognise that I did not speak of the number of people travelling on buses. I referred to the services offered, and this is an important distinction. It is vital to have services offered which are relevant to people's needs. I can only tell the hon. Gentleman that, right in the middle of our lengthy Committee stage, Midland Red, in my constituency, cut services. I hope that the hon. Gentleman will forgive me, therefore, if I find his remarks strange when my constituents tell me that right in the midst of this argument, in which he and his right hon. Friend have argued that cross subsidisation will somehow continue the magic of public bus services, in my constituency those very services were declining.

Mr. Prescott

Take an example from a Labour area.

Mr. Mills

My constituency is not the only one where that has happened. This brings me back to the real divide between us. Cross subsidisation and directed traffic under the present system just does not work. I re-emphasise that in North Warwickshire, Solihull and the rest of my area in the Midlands this need has now become a prime priority. There are old-age pensioners, disabled people and families who are abandoned and marooned by the lack of bus services. So we are not starting from the basis of an ideal situation which is beneficial to all.

Secondly, is it right to define cross subsidisation as a necessity for the provision of bus services? What is cross subsidisation? It is the use of finances generated from one set of services to support another set of services. Is this genuinely sacrosanct? Is it not part of the duty of an elected authority, or of a non-elected authority—even a non-elected authority such as the traffic commissioners —to recognise that if socially needed services should be provided they should in fact be provided? Is it not a better financial discipline to recognise that by defining, without cross subsidisation, what each service provides in terms of its benefits to the customer?

We are not talking about politics here. We are talking about people who want transport services to take them from one point to another. Could people not have a better service if we allowed ourselves to make judgments? I am sure that many passenger transport executives and bus companies would accept the argument that if they are there to provide services it is up to the elected authorities, whether Members of Parliament, county councillors or district councillors, to decide where and how the public money should be spent. I find it difficult, therefore, to understand why cross subsidisation should be regarded as sacrosanct.

The right hon. Gentleman said that we should have to face some unpleasant options. Why should they be unpleasant? Under the Bill we are for the first time embodying in law opportunities which in many of our constituencies have already been shown to be genuine opportunities. Private enterprise can often provide at lower cost better services than those provided by public enterprise. This also is part of the great divide which took us over, as I recall it, 130 Divisions in the Standing Committee. By energising the forces of private enterprise we shall get people working at a cost lower than that shown by the passenger transport executives or the nationalised bus companies in the provision of services at times when people want them and in vehicles as they want them.

We must all be familiar with the sight of huge buses with three people sitting in them. I am not so unsophisticated as to make that point without recognising that at peak times those very buses may well be full. But I put it to the Opposition that there could well be a place for buses run by private enterprise at certain times of the day to provide services which will make a profit for an entrepreneur, providing services for local residents, while at other times of the day on the same routes we could still achieve services in different buses for those of the population who require them. I believe that a complex mixed economy of transport provision, both private buses and public buses, is the only answer.

Under the Bill, without new clause 6, which I sincerely hope we shall not pass, we have for the first time innovatory legislation which allows entrepreneurs to do just that. Many of us have in our constituencies entrepreneurs who have already battled through the lengthy process of arguing with the established bureaucracies of the National Bus Company, the passenger transport executives and the local authorities in order to get their services going. They are already providing services. In Committee I gave three examples from my own constituency where they are providing excellent services where the institutionalised public provision would just not succeed. I therefore urge the House to reject the new clause.

4.30 pm

Mr. Sydney Bidwell (Ealing, Southall)

I did not sit through the long, weary and tortuous hours in Committee, but I took part in the Second Reading debate. In looking at the new clause, I can imagine that it somewhat counters the substance of the Bill itself. However, it does not entirely throw out of the window the main purpose of the Bill.

In endorsing the argument of my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), it seems to me that the wording of the new clause—which I imagine has been drawn up very carefully indeed, and at first sight appears to be somewhat complex—can be the means of ushering in an element of planning in order partially to accept the fact that the Bill is now going through Parliament because of the inbuilt Conservative majority.

The Government have applied their mind to transport according to their own light, and they genuinely believe that out of their proposals will emerge a much better service for the people and a much more efficient one than we have had hitherto. I do not think that that is the case at all. Without new clause 6, I believe that the Bill could rapidly lead to a state of anarchy on our roads.

Like many other hon. Members on both sides of the House, I foresee the time rapidly approaching when more and more car owners will have to look to the passenger services of various kinds in order to get to work. If that is the case, it means that more workers will be involved in those services. There is real fear, particularly on the part of members of the Transport and General Workers Union, that an anarchistic situation will arise from the Bill's central provisions. It is up to the Minister to allay those fears, because it is upon the good will of transport workers and the way in which they go about their daily lives that at the end of his period the right hon. Gentleman will be judged to have been successful or to have failed.

In addition, there is the question of road slaughter. If efficient public services are used by more people than use our existing services, obviously the question of slaughter on the roads diminishes a great deal, because it arises precisely from the various kinds of transport which at present use our roads.

These questions are interlocked. I believe that as a result of the requirement in the new clause, whereby local authorities will be under the discipline of a cross-subsidisation system, local authorities will be able to play a greater role in the localities, and throughout the county complex, to ensure that the changes envisaged by the Government and the Minister are successful. I respect the Minister's views, but only the test of time will tell whether the basic Socialist philosophy as applied to public transport is better than his. The proof of the pudding will be in the eating. I believe that at the Tory Party conference the Minister described his proposals as somewhat revolutionary. In so far as his proposals spell out considerable changes, I suppose that they could fall into that category, although we are not accustomed to Tories talking about revolution.

Nevertheless, the proposals spell out considerable changes that must be ushered in with a good deal of caution. I am open-minded about certain aspects of the proposals, because, as I said, the proof of the pudding will be in the eating. However, as my right hon. Friend said, there is a fear that there will be a wholesale creaming off.

The trade unions which represent road passenger service workers in the public sector are well organised, but there is a fear that the wages and conditions of those workers will be put in jeopardy as a result of their being left with the Cinderella services. There is a fear that they will be left with the empty vehicles while the fly-by-night operation, which will pass under the sunny title of "private enterprise", will cater only for rush-hour periods or times when the vehicles are likely to be fully used. The danger is that if such an operator gets fed up, if someone goes sick or if a man's son does not wish to carry on with the service, many people will be bereft of any service whatever. That is a real fear.

There is a need for a balance, and I believe that the terms in which new clause 6 is drawn will ensure that that balance is steadily applied and arrived at.

Mr. Peter Fry (Wellingborough)

I begin by declaring an interest in this matter. Having heard about the length of the Committee proceedings, I am not sorry that I missed them. However, there is one relevant question that should be asked, not only in regard to this part of the Bill but in relation to the new clause. Will what is proposed either halt the decline in services in some parts of the country or improve them? Surely, that is the only relevant question that we should ask this afternoon.

My right hon. Friend the Minister has put forward what have been claimed to be far-reaching proposals, and the right hon. Member for Barrow-in-Furness (Mr. Booth) has rightly expressed certain fears about what could happen. I am sure that all of us would accept that the present situation is unsatisfactory. Indeed, I remind the right hon. Member for Barrow-in-Furness that over the years the Labour Government introduced new legislation because they realised that what was happening was totally unsatisfactory. For example, bus services were declining and more and more people in various parts of the country, particularly in the rural areas, were finding themselves without public transport.

I do not entirely agree with what my hon. Friend the Member for Meriden (Mr. Mills) said about cross-subsidisation, because bus service operations are somewhat more complex than many people appreciate. It is not just a question of a driver starting off at point A, driving to point B and back to point A, and doing that throughout the day. Because of the complication of drivers' hours and other legislation which applies, it is often necessary for that driver to make two or three journeys from B to C, or even from C to D, before he reverts to B to A. That may confuse the House. I confess that I have always found the matter confusing. However, it means that in employing that bus and driver we are not dealing with just one service. If anything happens which undermines or removes the need for the service while the driver is operating, the coherence of the whole of the service is undermined. As I understand it, that is the main point that the right hon. Member for Barrow-in-Furness put forward.

How does my right hon. Friend see the role of the local authorities and the county councils which have the responsibility for the co-ordination of public transport and, indeed, the job of subsidising public transport in the event of that type of situation arising? What will happen if, because of the creation of new contract carriage services, services that are subsidised are undermined? For example, what will happen if the local operator who is perhaps part of the National Bus Company says "It is not just a question of my doing away with the route from B to C. I must do away with the routes from C to D, D to E and E to F because they will no longer pay. On the other hand, in order to maintain those services I require a considerable amount of money from the ratepayer and the taxpayer"?

Therefore, we must carefully examine the role that the county councils are expected to play. They have been anxious to take on the responsibility in the past. I remember my right hon. Friend and myself arguing vociferously that they should be given the right to control public transport, particularly in rural areas. If they have this responsibility, they should be consulted and have a strong say before we introduce a whole series of new services which could damage what already exists.

There is one fear that niggles me about this part of the Bill. I do not doubt my right hon. Friend's intention to try to bring new services and life into public transport. For that he deserves every commendation. My fear is that the freedom to be given is likely to bring into public transport not just the fly-by-night operators—I do not go all the way with the hon. Member for Ealing, Southall (Mr. Bidwell)—but those who have not done their sums too carefully, who may think that they can operate an express service and then find that the economics are not going too well.

The temptation to break the law—the temptation to try to get extra revenue—which existed before there was legislation on bus services could happen again. Because of that, there is a danger that these new services may siphon off passengers from existing services rather than create more passengers and services. If that happens, it will undermine the real purpose of the Bill—the creation of new services and help for people who are without public transport at the moment.

I hope that, in reply to this short debate, my right hon. Friend will try to spell out for me and satisfy me that the Government are aware of this danger and that they have consulted the Association of County Councils on how they are to meet this need. The danger may not be immediate. It may not be next year or the year after. The real danger is that many of the new services may come in and prove unprofitable and that, in about 1983 or 1984, we shall find ourselves with less public transport than we have today.

Mr. Harry Cowans (Newcastle upon Tyne, Central)

I listened as carefully today to the hon. Member for Welling-borough (Mr. Fry) as I did during the transport debates in 1978. I do not agree with everything that he said, but he introduced a note of realism into the debate today. Without doubt, the new clause tries to put a note of realism into the Bill. One could argue that it is a conservative clause, because it introduces a note of caution.

Having heard the hon. Member for Meriden (Mr. Mills), one would have thought that entrepreneurs were queueing up to take over these services. The clause makes it abundantly clear that we are talking about rural services—the unprofitable parts of the transport empire. That is the fundamental difference between us.

I turn to the cross-subsidisation argument. Whether we like it or not, people outside sometimes make the accusation that in this place A votes "Aye" and B votes "Nay" and never the twain shall meet. Put another way, Conservative Members vote "Aye" and Labour Members vote "No" and realism goes out of the window. I hope that that will not transpire in this debate, because there is real worry about this matter.

As the hon. Member for Welling-borough said, the worry is not immediate. It will not happen the day after the appointed day. The worry goes beyond that point. It would appear that many people hidden away in many constituencies have suddenly discovered that they can run the transport system. One could argue that the opportunity is available to them now. Conversely, it can be argued, as no doubt Conservative Members will argue, that the transport commissioners grind exceedingly slow. But in the pursuit of profit, even when the rules of the game grind exceedingly slow, has anyone who can make that profit been put off before? The answer must surely be "No".

4.45 pm

There has been no queue of people to operate these rural services. This matter goes beyond party politics. We are talking about people in rural areas who rely on transport. There has been no queue of people to provide these services.

The clause is carefully worded. It is cautionary. It urges us to look at the systems which have previously been subsidised before we introduce another system which may not exist for a very long time. One would think that a local authority would look into rural transport before pouring good money into it. Successive Governments have supported the view that rural transport should be subsidised.

The fundamental issue between us is cross-subsidisation. I appreciate that to Conservative Members the National Bus Company is poison. However, it exists. There is also another clause on this matter, which, for fear of incurring your wrath, Mr. Deputy Speaker, I shall not mention. However, there is the prospect of £5½ million being lost, a percentage of which could be used in cross-subsidisation. If that percentage is taken away, that cross-subsidisation will not exist. It can be likened to a tree. The National Bus Company does not cross-subsidise out of the goodness of its heart. It cross-subsidises in the form of a tree. If the branches feeding into the trunk make the trunk profitable, it makes sense to support the branches.

Our worry is that, not in the first instance but over a period of time, rural transport will be non-existent because people who have not done their homework will move in. Everything in the garden will look rosy for a short time, but they will kill off existing services, because of the cross-subsidisation agrument, and then move out. What will fill the gap? Perhaps the Minister, in replying to the debate, will take us beyond the appointed day, when this free-for-all is to transpire. If it does not work, will he tell us what he proposes to put in its place by way of rural transport? That is always assuming that the Minister and his hon. Friend are still in the positions that they now occupy.

Mr. Fowler

The essential point about the debate was put forward by my hon. Friend the Member for Wellingborough (Mr. Fry). He asked whether the new provisions would benefit the travelling public. I agree that, above all, that is the litmus test. It is about not what the lobbies, the operators or the unions want —all these bodies have a right to put their arguments—but what is in the best interests of the travelling public. Therefore, I should paint in the background to what we are doing.

The aim and purpose of the Bill is to remove unnecessary restrictions on the bus industry and, at the same time, provide the opportunity for new services to develop. As my hon. Friend the Member for Meriden (Mr. Mills) rightly pointed out, some of the new services will undoubtedly be provided by private operators. The obstacles now put in the path of operators wishing to run long-distance coach services do not serve any worthwhile purpose. It is right to remind the House that essentially we are talking about express services which, by definition, are services covering more than 30 miles.. Such obstacles in the long-distance area restrict the choice of the public.

There are those who want to travel by express bus and who prefer that option either to driving or to catching a train. If a man travels from Bristol to Birmingham he may want to travel by air, rail, car or coach, and the Government see no justification for seeking to restrict this choice of method of travel. That sums up my philosophy, but, what is even more significant, it sums up the philosophy of the Labour Government. In their White Paper on transport policy they said: Provided the terms of competition are fair, if people choose to travel by coach rather than rail or air because lower fares are more im- portant to them than speed, they should not be prevented from doing so. That is a sentiment that I support entirely.

Mr. Stanley Cohen (Leeds, South-East)

The problem is whether those people will have the right of choice. I remind the Minister that there was an occasion during the Beeching era when the rail service between Scarborough and Whitby in Yorkshire was terminated as the result of an investigation by the traffic commissioner, who was assured that private bus operators would provide an alternative service. But within 12 months that alternative service no longer existed because it was totally unprofitable, and the people who lived in those rural areas were isolated from public transport as a consequence.

Mr. Fowler

I shall come to those points. We are dealing with contract carriage, but essentially we are talking about express services. In other words, we are dealing with services that are more than 30 miles in distance. That is the aim and purpose of what I am about to say.

In the area of express services, it is fair to remove the present licensing restrictions that prevent bus operators from competing on equal terms. In other words, contrary to what has been said, there is a demand for travel which at the moment is not being met. I believe, further, that that new demand, and the fact that resctrictions can and will be removed, will lead to new operators coming forward in this area.

I was attacked on the ground that new operators would not come forward and that there was no great demand for intercity coach services of for new coach services at all. But there are signs at present that exactly what I am predicting is taking place. An article in The Daily Telegraph on 21 January said: New private enterprise companies are planning to challenge the National Bus Company on key express coach routes when unrestricted competition returns to the business later this year for the first time in half-a-century". Surely, that is in the interests of the public.

Mr. Cowans

rose—

Mr. Fowler

What was the response of the National Bus Company? To do it justice, its express division controller was quoted in the same report as having said: Competition is a spur; it is not a threat. That is surely exactly the approach and feeling that there should be in the bus industry.

The first point that I make in refuting much of what has been said today, which I believe is not only alarmist but totally wrong, is that in this important area—this point was conceded by the right hon. Member for Barrow-in-Furness (Mr. Booth) in Committee—of inter-city travel there will be more opportunity and more providers. That will be in the interests of the public. Not one word that I have heard this afternoon challenges that.

Mr. Cowans

If the Minister reads new new clause 6 carefully, which I assume he has done, he will see that the key words are under a passenger transport policy network. The fear is that, as with a jigsaw puzzle, many local authorities and the NBC have subsidised a number of branches of the tree in the overall network. If we take out one or two of those branches the network will collapse. That is the main point of new clause 6.

Mr. Fowler

I shall come to the points made by the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans).

Basically, the Opposition are still concerned about the freedom that will be provided here. They wish to reimpose restrictions on these services. Indeed, they now wish to go further and extend those controls to services that are not even licensed at present. If the hon. Member for Newcastle upon Tyne, Central refers to the clause, he will see that those services are the private coach parties or contract carriers.

The Bill does not change greatly the position of those services except in one small but important way. The Bill will make it easier for people to club together to solve their own transport problems. I am thinking especially of commuter clubs which are currently prevented from hiring coaches for journeys to work by the restrictions on the making of regular journeys. This restriction will go, but those which protect the ordinary local bus service will remain.

Concern for the local bus network—I fully appreciate what the hon. Member for Newcastle upon Tyne, Central is saying—is at the heart of the clause. I have sought to make clear all along that it is no part of our desire to destroy that network. That is why I have retained licensing for all services which are part of the local network. The distinction that I have drawn in the Bill between express on one side and stage carriage services on the other does that. In other words, it preserves the distinction between the express services that are outside the licensing restrictions and the local services where I believe there is a need for control. Although we have changed the presumption of proof, we have accepted that.

What I do not see is why a non-stop express bus from, say, London to Manchester should damage the local bus network. Contract carriages also serve quite a different market. They are privately run and are organised voluntarily. That is not unfair commercial competition. That kind of commuter coach service will supplement regular services at peak periods and will not damage the network.

I believe that the Bill makes a proper distinction of the local network. My purpose is not simply to maintain and protect that network in its present form. The public would not be satisfied with that, just as they are not satisfied—as my hon. Friend the Member for Meriden rightly pointed out—with the present level or standard of local bus services. The Bill will change the balance of licensing in favour of the operator wishing to run new or better services. It will be for the established operator to prove that the competition will be detrimental to the public interest.

Cross-subsidisation may be an important issue here. But the operator will be required to satisfy the traffic commissioners that it is of overriding importance. I understand, obviously, the arguments about cross-subsidisation, but I believe that it is necessary for those who claim that cross-subsidisation is taking place to justify the patterns of that subsidy. That is a healthy discipline for the operators themselves. When it comes to the local services—the services within the 30-mile threshold—as I have said, there is no question but that they will have to go to the traffic commissioners. The commissioners will have to judge whether that is an overwhelming argument.

5 pm

It seems to me, therefore, that the thrust of the Opposition's new clause is to protect the present pattern of cross-subsidisation and local authority support. The thrust of the Bill is to encourage a new look at those patterns to allow competition to be a spur to improving services and efficiency instead of placing an automatic and ever-increasing reliance on subsidy paid for by the ratepayer and the taxpayer.

When the hon. Member for Kingston upon Hull, East (Mr. Prescott) intervenes and tells me that South York shire is now the model upon which the Opposition's policy is based, I am bound to tell him that for three years I sat on the Opposition Front Bench and heard from the then Secretary of State for Transport in the Labour Government how iniquitous the policy of South Yorkshire was at the time and how it was that the right hon. Member for Stockton (Mr. Rodgers) wanted nothing else but to change that policy. Now we understand, with the change of management on the Benches opposite, that South Yorkshire, rather than being the villain of the piece, has become the hero of the piece.

We learnt many things during the Committee stage. The great differences in policy that have emerged between the Labour Party in Government and the Labour Party in Opposition have been some of the most dramatic.

Mr. Prescott

The right hon. Gentleman is being less than fair to my right hon. Friend the Member for Stockton (Mr. Rodgers). Whatever the differences of attitude about bus policies, certainly when my right hon. Friend was Minister he was concerned about the proportion of rates that South Yorkshire might be getting, but he was also concerned about the same argument for Oxford. At that time it was a very difficult argument. Nevertheless, he reached agreement the following year with South Yorkshire, which maintained the very principle that it has today, which has gone from strength to strength in passengers and in the provision of services in that area, to a far greater extent than any other metropolitan authority.

Mr. Fowler

That strains the matter a bit. I think that anyone with any objectivity who had listened to what the former. Secretary of State said over the previous two or three years about the policies of South Yorkshire could not conceivably come to the conclusion that those were policies that he supported.

Basically, however, I cannot accept the new clause to reintroduce controls in the way that it sets out. It would introduce new restrictions on contract carriage services, which under the present system are not licensed. The Opposition want to protect the local network. I understand that. I have made it clear—and I say this again to my hon. Friend the Member for Wellingborough, who made a thoughtful and critical speech—that I am in no way out to destroy that network. That is why I have retained licensing for all the services which are part of that network. But I am confident that the distinction that I have drawn between the express and the stage carriage services does just that. I see no reason why the express services should be a challenge to that, nor do I believe that contract carriages, which are serving a different market, should be a challenge to that. In other words, I believe that services such as commuter coach services will supplement regular services at peak periods and not damage that network.

Mr. David Penhaligon (Truro)

On a point of information, will the Minister let me know whether the sort of holiday excursions organised in parts of the country such as mine, where people offer services in a number of picturesque areas —say 10, 15, 20 or 40 miles away from the passengers' main residence during a holiday—are derestricted under the express licence regulations? Clearly, it could not be described as "express", but certainly the passengers, at one time on the trip, may be more than 30 miles away wrom where they started. Will that sort of service be derestricted under the Bill?

Mr. Fowler

The short answer is that if the journey itself is over 30 miles, an express service, it would be outside the restrictions, but there are different derestrictions in the case of excursions and tours. I should need to look at the question in detail if the hon. Gentleman has a particular point, but my straight answer is that I believe that what he is saying would be outside the powers of the traffic commissioners.

Therefore, it is for operators and county councils to take an objective look at the patterns of cross-subsidisation that occur. I think, however, that it is not right to become obsessed with the subject of cross-subsidisation.

Mr. Penhaligon

I am sorry to persist, but it is clearly stated in the regulations outlining the provisions that a person must be set down 30 miles from where he started. The irony of these particular trips is that the passenger is set down precisely where he started from, in exactly the same spot. I am wondering, therefore, whether that is covered by the express service definition.

Mr. Fowler

As long as any point from which the passenger is taken is 30 miles away, that would take him ouside the ambit of the commissioners.

Mr. Penhaligon

It does not say that.

Mr. Fowler

With respect, it does say that. Also, with respect, the hon. Gentleman served on the Committee on the Bill and we have been debating it for about 110 hours. I shall not embarrass the hon. Gentleman by pointing out the time he spent on it during the Committee stage.

Therefore, the greater competition that I hope to see within local services will be a better spur to improving the services and efficiency than automatic and ever-increasing reliance on subsidy. But I beg the House to understand that, when it comes to the question of express services, I hope that there is now, as I believe there was, the start of an agreement, when we were talking in Committee, and that the fact that we are derestricting these important inter-city services—the services between London and Birmingham, and between London and Manchester, intercity services of that kind—is something that is totally in the interests of the public. We look forward to new operators coming forward on these routes and providing low-cost transportation for the public.

That, I believe, is in the interests of the travelling public. That is what we judge the criteria of the Bill to be.

Mr. Dobson

As a new Member, it strikes me that the response of Oppositions faced with Government measures falls into two categories. They either denounce them as being likely to have the most far-reaching and disastrous effects or, alternatively, they say that the Minister concerned is leading people on into believing that what he is introducing will have a dramatic effect, when it will have practically no effect at all.

In an effort to resolve that problem for myself today, I think I can say that the delicensing provisions of the Bill will probably achieve both of those things, because it seems fairly likely that there will be parts of the country which will be very adversely affected by the delicensing measures and parts where there are scarcely any effects at all. I am prepared to concede that on a certain number of what may be described as privileged routes there will be services that will be improved as a result in an increase in the number of operators and, consequently, an increase in the number of services.

I had not intended to speak until I heard the Minister refer to the boss of the express division of the National Bus Company saying that such competition was a spur, not a threat. Prior to that, I heard the Minister say that we should consider not the interests of various pressure groups, such as the management, unions and so on, but those of the travelling public. I can understand why the man from the express division does not regard the delicensing of the express services as a threat to that part of the company for which he is responsible. It is likely that the National Bus Company will respond to the new situation by concentrating a great deal of effort on the profitable express services.

I do not know what the NBC will do with the services that are not on express routes and are no longer profitable and no longer capable of being subsidised from the profits of the express services. The manager of the express division may loom larger in the hierarchy of the National Bus Company as a result of the proposals.

Mr. Fry

Is not the hon. Gentleman aware that the National Bus Company operates under various headings? It is hardly likely that express services will subsidise the operations of one of the company's sub-divisions. Although we can talk about the overall profitability of that company, the hon. Gentleman's recent remarks tend to mislead the House.

Mr. Dobson

I had not intended to mislead the House. I rely on the clause put forward by my right hon. and hon. Friends. It refers to the element of cross-subsidisation with transport supplementary grant or to a route upon which there is a cross-subsidy under a passenger transport policy network agreement. Perhaps I did not make clear that some areas may benefit from the Government's proposals. However, others will not. I tried to make a distinction. The clause seeks to protect those which are affected by the transport supplementary grant and by cross-subsidies under the passenger transport policy network agreements. I therefore do not accept the hon. Gentleman's point.

Mr. Fry

If the hon. Gentleman refers to Hansard, he will discover that he said that it was the express services of the National Bus Company that would subsidise other bus services. As I said in my speech, it is possible that some express services may affect more services, but the National Bus Company operates through separate companies and those companies are accounted as such. As a result, the hon. Gentleman's forecast will prove incorrect.

Mr. Dobson

I accept that technical point. Nevertheless, the express services of the constituent parts of the National Bus Company will probably loom larger in the activities of the National Bus Company. The provision of rural services by that company will probably loom much smaller. Those waiting in country lanes for a bus to appear in the distance will probably have to wait much longer as a result of the proposal. Services will become less frequent.

The same applies to the new contract carriage services. The Minister upbraided my right hon. Friend for wishing to extend coverage to contract carriage services. He would be right to upbraid us if we had wished to extend the limitation to contract services of the type already discussed. However, if one considers the contract carriage services that are to be provided by clubs or by those who club together allegedly to look after themselves, we can see that they will have an impact on those services. It is a matter of dispute whether that impact will be favourable or adverse.

On Second Reading and in Committee we were concerned about protecting the bus network, particularly in rural areas. The Minister said that he would retain licensing in rural areas as that would help to preserve the network. If that is what he means, logic requires him to maintain a licensing system, or consultation with traffic commissioners, on those parts of the express system that are covered by TSG or provide an element of cross-subsidy for the rural network. The Minister conceded that that network needed protection in the form of licensing. However, he will chuck away part of that licensing. As a result, part of the provision of cross-subsidy from the express services into the rural services will be taken away. That is plain daft. It does not follow the logic of maintaining licensing for rural services.

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We therefore return to the fundamental question of whether a free-for-all in certain parts of the country will benefit the bulk of customers. We do not believe that it will. The Minister and his colleagues apparently hold a different view. However, there is little evidence that this burst of free enterprise on profitable routes will favourably affect the provision of services in rural areas. Those networks are already thin on the ground. We repeated one point ad nauseam in Committee. I hope that I shall not nauseate too many hon. Members if I repeat it this evening. The existing network of rural services is, on the whole, maintained by one form of subsidy or another. Such subsidies come from the taxpayer, the ratepayer or other users of the bus routes that pay. Rural networks cannot pay. Anything that lessens these subsidies to rural networks will damage them.

The categories of express service and contract service that are mentioned in new clause 6 are involved in the cross-subsidy system. They should remain there. That provision should continue, to the benefit of the most deprived areas. We all accept that some routes may have four or five express coaches travelling on them each day. As a result of competition or of an additional operator, such routes may be used by five, six or seven coaches a day. Perhaps that would benefit those travelling on such routes. Such an occurrence may not prevail for long. However, it may pay and benefit the users on that limited number of high-paying express routes. If the clause is not accepted, that change—which may be beneficial in the area concerned—will damage rural networks.

Mr. Cowans

rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill)

The hon. Gentleman has already spoken. He cannot speak twice on Report.

Mr. Booth

I am greatly concerned, because the Minister has totally misunderstood the new clause. He has opposed it on the ground that it will tend to defend and maintain the existing system and he envisages a superior system emerging as a result of the Bill. We can have many arguments about the effects of the new clause, but it cannot be argued that it will maintain the existing system. It will not. If we had wanted to put down a new clause to maintain the existing system, we should have done so. We have not chosen to do that.

We recognise that the Minister has a majority in the House and that he can therefore introduce a different type of contract carriage operation that will enable operators to run bus services over short distances within urban and rural areas on a regular basis—for example, every Monday to Friday at nine o'clock in the morning and five o'clock at night. That will be possible under the contract carriage provisions in the Bill.

The new clause does not take that power away. It does not change the definition of "contract carriage". It provides only that a test—not a prohibition—shall be applied where a new type of service is introduced into an area not currently served under networking agreements or TSG support. Where the service is introduced on a route presently served under a road service licence, a test should be applied by the traffic commissioner who previously decided to grant a road service licence. When granting the licence, he believed that it would enable a service to be operated in the public interest. He decided that without any knowledge of any new contract carriage operations being introduced.

If somebody proposes to introduce a new service, a new decision must be made by the traffic commissioner about whether it is in the public interest. That should operate only in cases where the traffic commissioner has to take into account whether that licence affects the degree of cross-subsidy in his area. The Minister cannot deny that the commissioner may have specified special conditions on the licence to maintain a certain level of public service within the area. The licence should be issued subject to those conditions.

When the new contract carriage service is introduced those conditions may not apply, because there may no longer be any need for a degree of cross-subsidy. That is what the Minister and his colleagues want. Someone may be prepared to operate a contract carriage system that will relieve the need for a cross-subsidy.

We think that such operators will come forward only on the highly profitable routes to cream off the profits. However, we do not know that that will be the case. We are speculating and making intelligent judgments about a service that has not existed for the past half century.

We are not trying to change the provisions in the Bill. We are saying that where a contract carriage operator wishes to operate on a route where a road service licence has been issued and a cross-subsidy exists, the commissioner should consider the case. It is a matter of establishing protections for the road service licence holder.

Mr. Leslie Spriggs (St. Helens)

How would my right hon. Friend advise the Secretary of State to divide the services between the new operators, or the express operators, and the present licensed carriers? It is likely that a new operator will pick the most lucrative routes in the network. How can an unfair distribution of routes in the network be avoided?

Mr. Booth

I shall try to answer those points later. At this stage I shall deal only with the one affected by contract carriage. If I were seeking to advise the Minister, I should tell him that the new system should operate only in those areas where its introduction would not damage the public interest, namely, where people were already operating subject to conditions of road service licence or with the aid of a cross-subsidy or TSG. In those areas the matter should be considered by the responsible authority. In the case of a cross-subsidy, it should be considered by the traffic commissioner. In the case of a TSG, it would be a matter for the local authority which made the grant.

Mr. Fry

I understand the intention behind the new clause. I am not unsympathetic to it. Does the right hon. Gentleman accept that the way in which it is phrased will give rise to an enormous number of applications to the traffic commissioners, because a large number of routes are subsidised? For example, let us consider an express service between London and Manchester. For part of its journey it would run over part of the London Transport ordinary bus system. To refer that application to the traffic commissioner would create an enormous amount of bureaucracy and do nothing to help the freeing of public transport from bureaucratic interference, which many of us feel is necessary.

Mr. Booth

It will lead to a great deal of additional work for traffic commissioners only if people seek to run contract carriage operations on routes that are presently subject to road service licences, to either cross-subsidy or TSG, or to a combination of both. It is my fear that some new operators will cut across those elements of the road service licence routes that provide substantial cross-subsidies. They may cover parts of routes at times that are profitable, leaving the remainder to be covered by an operator who is complying with a public interest requirement. The House gave the traffic commissioners the job of judging whether issuing a licence subject to certain conditions was in the public interest.

On the contract carriage aspect of the new clause, the Minister is not entitled to claim that he is defending the existing position. We are attempting to write into the legislation a check on the first phase of a new type of operation but one that does not preclude its introduction.

5.30 pm

Mr. Kenneth Clarke

I am not sure what the right hon. Gentleman's policy is. His new clause reads as if it refers to giving protection, against the new contract carriages, either to those services supported by transport supplementary grant or to those which are cross-subsidised. Therefore, on the face of it, I thought that his new clause said that the traffic commissioners should be consulted if a new work service or a school bus under contract carriage arrangements competed with a loss-making service which was either receiving revenue support or being cross-subsidised. Now, he seems to be changing his mind and extending the new clause to a great extent. He seems to be claiming that a service should be referred to the traffic commissioners if it is receiving revenue support—that is, if it is loss-making—or if it is profit-making and is cross-subsidising other services. It seems as if the right hon. Gentleman, in his beguiling way, wants to go to the traffic commissioners over every bus service that one can imagine. If that is the case, he is seeking to undermine the whole policy of the Bill.

Mr. Booth

It could be that certain operators who wanted to operate contract carriage services would have to go to a commissioner or to a local authority if they wanted to operate on a route already covered by either a loss-maker or a profit-maker. That is true. The limitations are such as to safeguard the wider public interest.

It might well be that a contract carriage operator could persuade a local authority, and the local authority could quite reasonably agree, that he should cover part of an operation. In fact, the operator could persuade the local authority that considerable public good could result from having another operator on the route at a particular time. It would be for the local authority to judge whether the contract carriage operator was undermining an element of its profit, so that it would have to put back a large part of what he was taking out in order to sustain the route.

I am not evading the issue. Under the terms of the clause it could well be that a certain operator might have to go to a local authority because he was seeking to operate on a profitable route, and in other circumstances an operator might have to go to the authority because he was seeking to operate on an unprofitable route. However, I stress that in those two cases the local authority's response would not necessarily be the same. It might welcome certain arrangements being made in certain circumstances.

In Committee it was pointed out that one of the complaints that one received from certain authorities about the running of their services was that they had to maintain an unduly large fleet in order to cover certain peak hours. There might well be a case in the minds of those authorities for having another operator lifting some of the peak load from their shoulders so that the rest of the service load was capable of being covered by a smaller fleet.

There are many aspects of this matter that must be considered. These things cannot be determined by the House. They must be determined by local authorities, the operators and, in some cases, the commissioners with their detailed and intimate knowledge of the problems of the area concerned.

The other issue that is covered by the clause is that of express bus services. Here again, there is room for reappraisal. I agree with the Minister that there are some cases in which people may be better served by two or three operators competing for a bus service running from A to B. However, that would be in circumstances which paid no regard to those living in areas between A and B which were currently being served by a single operator who was prepared to stop at various points between A and B. On a 30-mile journey at present, many operators are prepared to stop 10 or 12 times at places where they can pick up or put down passengers.

The issue at stake is whether that service could be sustained if, at certain times, another operator ran a service which went straight from A to B without stopping but took part of that route's traffic. In an ideal world where no financial considerations applied and there was as much money to support public transport services as operators could wish for, we would love to have an express operator from A to B alongside another operator stopping a dozen times between A and B. That would mean that both needs would be served. But the reality of the financial position of many operators is such that in certain parts of the country there is a genuine fear that such an ideal might not be possible. If there is competition between A and B, where the express operator is subject to no licensing procedure whatsoever, and at the same time a stopping service operator between A and B is subject to the ruling of the commissioners, who have to decide in terms of public interest, the commissioners' role becomes unrealistic. It is unrealistic for a commissioner to judge upon a situation in which there is no possible choice.

It is possible that someone will come to a commissioner for a variation of the conditions of his road service licence in order to cut down the number of places at which he stops between A and B because he can no longer compete with the express merchant. He may seek a variation of the conditions of his licence so that he has to stop at only two places. That may well be the kind of decision that will come to the traffic commissioner. Under the terms of the Bill, the traffic commissioner cannot have any opportunity of considering the effects on that service and on the public interest. Therefore, it is proper for the new clause to say that where the effect of introducing new express carriage operations is such as to impinge—and only where it is such as to impinge—on network agreements or cross-subsidy arrangements, the commissioner should have a chance to look at the issue again. That is an important proposition.

I urge one further consideration. We do not have a rigid, inflexible system in this country. Traffic commissioners do not meet week in week out, and month in month out, in order to turn down new applications. All the evidence that I have shows that there is a considerable degree of flexibility in the present situation. Many new road service licences are granted from year to year for all sorts of different services. Also, up and down the country there are a number of county authorities which are only too willing to look at alternative arrangements for passenger transport services in their areas if by any change there is a chance of improving the service or introducing new services. Therefore, the position is not rigid or sterile.

There is great possibility for improvement or change, given a realistic appraisal of the delicate balance between the amount of public money that is put in and the extent to which those who are operating are prepared to do so in a way that will maximise the service rather than individual profit. It was basically to try to combine those considerations, and bearing in mind the Government's determination to introduce new services, that the clause was tabled.

Mr. Penhaligon

rose—

Mr. Deputy Speaker

Order. It will be in order for the hon. Member for Truro (Mr. Penhaligon) to make a speech, but, as the Minister has replied to the debate, the hon. Gentleman may get an answer.

Mr. Penhaligon

That is a disappointment. I thank the right hon. Member for Barrow-in-Furness (Mr. Booth) for this interest in rural areas, but I wish to rebut much of what he said.

It is not true that rural transport survives on a system of cross-subsidies. Tragically, virtually no bus routes in rural areas make a profit. The question facing the Government, in considering whether there is to be a transport system in those areas over the next five or eight years, is how much money they are prepared to pour in.

We face a desperately difficult problem on which some difficult decisions will have to be made. I hope that the Government will put in money, otherwise a ludicrous number of people will be more isolated in their home communities than they have been at any time in the past 100 years.

Mr. Fowler

The hon. Gentleman's opening remarks were correct, and it is right that the House should be reminded of the situation that he outlined, but does he not agree that it is a matter not just of the amount of money but of getting value out of the investment that local authorities make?

Mr. Penhaligon

I accept that. Value for money is always a major concern, but I warn the Minister that it will cost quite a lot of money, whether he gets value for it or not, to keep going rural bus services in a county such as Cornwall where there are 100 recognised routes of which only two make a profit. Five or six routes break even—and on the slide rule aproach might make a small profit or loss—while many routes lose a lot of money.

M. Prescott

I took a particular interest in Cornwall during the Committee proceedings. It is clear that only one or two of the NBC routes are profitable and that the non-profitable routes are subsidised from the transport supplementary grant.

Of course, when the bus company approaches local authorities for assistance from the grant, the authorities usually require that money made on the profitable routes should be ploughed back into non-profitable routes before the deficit on operating costs is made up from the grant.

Mr. Penhaligon

I do not deny that. There is some significance in that point, but it does not carry the weight that the hon. Gentleman and his right hon. Friend the Member for Barrow-in-Furness attached to it.

There is only one profitable bus route in Cornwall, that between Camborne and Redruth, neither of which is in my constituency. Those towns are about four miles apart and a single bus travelling endlessly from one to the other could be quite a profitable operation. I can think of no other bus route of which that could be said.

The right hon. Member for Barrow-in-Furness argued that the end-to-end merchants—a good description—on the 30-mile routes would take passengers from the stage carriage routes. I doubt that. The Bill refers to 30 miles in a straight line. No one could claim that the roads in Cornwall are anything approaching a straight line, and a 30-mile distance as the crow flies would involve a stage carriage route of about 35 miles.

I should be interested to know how many people in Cornwall, Devon or other rural areas use stage carriages for journeys of 30 miles in a straight line. I suggest that it is incredibly few. Anyone contemplating such a journey would need to have an enormous amount of time to spare.

For example, the journey from Penzance to St. Austell is more than 30 miles as the crow flies and the journey time is about three hours. Fortunately, there is still a train service between those towns and anyone making that trip takes the train.

The amount of business that will be taken away by the end-to-end merchants will be remarkably small, though I must tell the Minister that the number of people who will operate such 30-mile routes in my area will also be remarkably small. I cannot think of a single such route on which a profit is made.

I am concerned about one form of cross-subsidy in the South-West which may be ended. Many private operators in counties with a large tourist industry survive because of the lucrative trade for 10 or 12 weeks in the middle of the summer when they take thousands of visitors to seaside resorts and places of interest. There is no doubt that, as the Minister said, those who go beyond the 30 miles in a straight line from where they started will operate on an unlicensed basis. A number of operators in Cornwall point out that they survive because of the business of those few weeks, which, by chance, come at the time when there is no school transport business.

5.45 pm

For those few weeks they can operate profitably and keep a substantial fleet on the road, and that enables them to keep in business for the rest of the year a fleet of a size that they would not otherwise be able to operate. Under the present licensing system, all the coaches that flood into the South-West bringing tourists from Birmingham, London, Manchester and elsewhere are not allowed to operate journeys over 30 miles in my area unless they have a licence. In effect, the coaches cannot be used during the week and cannot ply for business on a trip from, say, New-quay to Land's End—a trip that tourists always insist on taking, though I cannot understand why.

The operators in my constituency are worried that they will lose that sort of business to the tourist coaches, because they will ply for hire on the few routes that are more than 30 miles as the crow flies from the starting point.

Mr. Fry

Surely, coaches from Manchester which deposit people in Cornwall usually take back the holidaymakers whom they left there the week before. Is not the hon. Gentleman exaggerating the risk?

Mr. Penhaligon

I am not making the point that strongly, but what the hon. Gentleman says is not wholly true. I could take him to car parks in Cornwall in the middle of the week where he could see an apparently endless sea of coaches. I am sometimes amazed at how many coaches there are in this country, judged on the evidence of a few weeks in the summer.

Newquay is the main tourist resort in Cornwall. The native population is no more than 14,000, but in the middle of August there are perhaps 180,000 people in the town. In mid-week periods, there are coaches in Newquay with nothing to do and the local operators, who keep the private end of our transport system in being, are worried that the operators of those coaches will ply for hire in competition with the local operators in trips from Newquay to Land's End. The driver of the tourist coach is paid for the week and the coach has been hired for that time. The marginal operating costs of such a coach would be small and its operator would be able to undercut local services, at least on longer day excursions. I should be disappointed if that happened. The new clause would be a sledgehammer to crack a nut, and I believe that the substitution of 40 miles for the 30 miles in the Bill would remove many of the problems.

Operators in the South-West have continually put the problem to me. I did not foresee it when the Bill was published. On the whole, the proposals outlined by the Government are reasonable and will do no harm, though only time will tell what good they will do. I mention that isolated example of cross-subsidy in the South-West because it can make a useful contribution to the transport system of the area. I shall not vote for the new clause, because it is too complicated to be true, but I ask the Minister to look at the problem that I have raised and consider whether there is some way of protecting that small industry.

Mr. D. N. Campbell-Savours (Workington)

I had hoped to be allowed to serve on the Committee that considered the Transport Bill, but I was put on the Competition Bill Committee and was therefore unable to take part in the Committee's consideration of the Bill before us.

My right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) adequately argued certain aspects of the matter covered by the new clause and referred in Committee to a problem in his constituency. I wish to draw attention to a problem in my constituency stemming directly from the passage of the Bill through the House. The problem is causing considerable disquiet in West Cumbria among the travelling public, among the trade unions, which recognise the dangers embodied in the Bill, and among the employees of Cumberland Motor Services, who are worried about the passage of the Bill. The problem relates to the trial area aspects of the Bill, although this matter is to be dealt with in a further new clause, and the operation of new licences.

I cannot understand why great armies of lion. Members are not manning the Conservative Benches. Without the new clause that we wish to insert, the Bill will have a major effect on Conservative constituencies that enjoy cross-subsidised rural transport. I am at a loss to understand why only nine or a dozen Conservative Members are present. Following the defeat of a certain clause in the Education (No. 2) Bill in the House of Lords, one wonders whether those same noble Lords who joined together to defend the interests of the constituents of Conservative Members—namely, those in rural areas—will join together to defeat this aspect of this Bill. The same people will be affected by the absence of the new clause if the House fails to carry it.

In my constituency of Workington, Cumberland Motor Services operates in the area of Allerdale and Copeland. My constituency covers a number of rural communities and small towns. In my conversations with officers of the transport authorities and members of trade unions involved in transport in West Cumbria, I have established that only 50 per cent. of routes in the area are profitable. I wish to draw to the attention of the House those routes that are profitable. I want the Government to inform the county authority what is to happen to the rural routes that do not produce a profit. The authority has a legitimate right to know from where the money is to come to fund those routes. The public also have a right to know what services will be available to ensure their safe passage to major conurbations for shopping.

The Whitehaven-Workington, Workington-Maryport, Whitehaven-Carlisle and Keswick-Whitehaven routes, which pass through my constituency, are profitable, but all the public transport provision between the villages and small towns of Aspatria, Brigham, Broughton Moor, Ireby, Bothel, Lamplugh, Deanscales and a number of small communities and villages is losing money. We want to know what action the Government will take to ensure that those routes are pre- served. We do not believe that it is possible that any enterprising young operator will move in and put some transport—

Mr. Kenneth Clarke

An Adjournment debate would probably be more suitable for what the hon. Gentleman has in mind. We have had the pleasure of meeting the Cumbria county council. Its nonprofit-making rural routes will be supported, like others, by revenue support and transport supplementary grant. They are not adversely affected by the Bill. The county council, like other shire counties, was reassured by the generous treatment which, even in these difficult times, we were able to give to shire counties in the award of transport supplementary grant for this purpose this year.

Mr. Campbell-Savours

The hon. Gentleman seeks to reassure me. I am told that for 1981 the transport undertaking in West Cumbria is having to bid £600,000, in conjunction with profits, through cross-subsidisation, to subsidise the routes that are not making a profit. Is the hon. Gentleman suggesting that additional money will be made available through the subsidy system to ensure that those rural routes are preserved? I am asking the hon. Gentleman to tell the House and my constituents that all those rural routes will be 100 per cent. protected under the provisions of the Bill.

We are basically talking about whether the Government are willing to underwrite any added losses that may stem from the loss of profitable routes by the semi-municipal undertaking. It seems that the county Conservatives are on the horns of a dilemma. They have to decide whether to back their political prejudice and carry the Bill through all its stages, ensuring that the ratepayers, or the taxpayers, are asked to pick up the ticket at the end of the day, or to fight the Bill by impressing on noble Lords the need for their support for amendments to the Bill.

I must appeal to my constituents from this Chamber. I am informed that the districts of Allerdale and Copeland in West Cumbria are under consideration as trial areas, to which I referred. This may be a matter to be dealt with under the next new clause, but I can adequately refer to it now. It is part of the general argument. I am told that meetings are to be convened in the near future. I say to my constituents from the Floor of the House that once again, in the spirit of previous petitioning, they must petition the county authority to ensure that Copeland and Allerdale are not designated as trial areas.

Mr. Deputy Speaker

Order. The hon. Gentleman is now moving on to the next amendment. He must relate his remarks to new clause 6. This may be an important matter, but the House is debating new clause 6.

Mr. Campbell-Savours

I shall therefore move on, Mr. Deputy Speaker—

Mr. Booth

If it is the case that the Cumbria authority, in which both my hon. Friend and I have an interest since it is the area in which our constituencies are situated, was reassured by the allocation of transport grant, has the county informed my hon. Friend—it has not informed me—of the extent to which it is alarmed by the provision in the local Government, Planning and Land (No. 2) Bill that gives the Minister power to withdraw the transport supplementary grant?

Mr. Kenneth Clarke

Before the hon. Member for Workington (Mr. Campbell-Savours) leaves this matter, may I put a point to him? He is obviously addressing his constituents, and there is a danger that some of his old buck will appear in local newspapers. Will he also inform his constituents that, at the moment, services are supported by revenue support backed by transport supplementary grant? This Government have dealt generously with the shire counties and will, within the limits of financial circumstances, continue to do so. The effect of a trial area will be not to remove that revenue support but to facilitate new operators coming in, if such new operators are available, and to extend the variety of services that might be available in rural and other areas of the county. It is a balanced judgment. I

do not believe that the hon. Gentleman has gone into the matter sufficiently to make a balanced judgment.

Mr. Campbell-Savours

Is the hon. Gentleman seeking to reassure my constituents that those rural services will not be affected by the introduction of trial area designation to West Cumbria?

Mr. Deputy Speaker

Order. Let us stick to new clause 6. It has nothing to do with trial areas.

Mr. Campbell-Savours

I should like to discover from the Minister what will happen to undertakings in counties such as Cumbria if certain routes are removed from the municipal undertakings and given to private enterprise.

Mr. Kenneth Clarke

They will not be removed.

Mr. Campbell-Savours

The Minister says that they will not be removed. Is he suggesting that the advent of new competition on the profitable routes will have no effect on the revenue of Cumberland Motor Services? If so, will he give us this undertaking once again? I am trying to establish the effect of the clause on the transport services in my constituency.

Is the Minister also aware that many transport undertakings are asking what will happen if these new entrepreneurs find that they cannot effectively manage routes or maintain the services required? Will the municipal undertakings then be required to move in and re-establish their services? Has the Minister thought out the implications for municipal undertakings if that be the case? Will he answer that question in the light of the problems that he knows exist in my constituency?

Question put, That the clause be read a second time:—

The Committee divided: Ayes 151, Noes 194.

Question accordingly negatived.