National Bus Company (Hansard, 3 December 1984)

§ 12. Mr. Ray Powell
asked the Secretary of State for Transport what were his reasons for rejecting proposals to split the National Bus Company into four private companies.

§ Mr. Ridley
I have not done so. I refer the hon. Gentleman to my reply to my hon. Friend the Member for Beaconsfield (Mr. Smith) on Friday 30 November.

§ Mr. Powell
As I received this morning a two-page foolscap letter outlining the Minister's reply on Friday — such a lengthy reply to an oral question is most unusual—perhaps you, M. Speaker, will allow me time to ask at least five supplementary questions.

§ Mr. Speaker
No, I cannot do that.

§ Mr. Powell
In that case, I must content myself with at least one. The two-page letter to which I have referred outlines the Goverment's objectives. The reply that concerns me refers to "the disposal—"

§ Mr. Speaker
Order. The hon. Gentleman must not quote.

§ Mr. Powell
The Minister suggests that the Government intend to dispose of the assets as going concerns. How will he dispose of going concerns that are not going—concerns that are going under—and how will that affect rural services? Is he aware that in my area bus routes are being curtailed and done away with because companies are going under?

§ Mr. Ridley
I thought it only courteous to send the hon. Gentleman a copy of the rather detailed answer that I gave to my hon. Friend in view of the fact that the hon. Gentleman had a question down for answer today. We believe that all the concerns are going concerns. Under the policy in the White Paper, those mainly engaged in uneconomic routes will be able to obtain subsidy after tender, or move into other areas if they wish to compete with other operators. That being so, I do not believe that any part of the National Bus Company need be non-viable.

§ Mr. Gregory
Will my right hon. Friend favourably consider a scheme to allow as many local managers and employees as possible to buy into their companies and so to share in the efficiency and profitability that will flow from bus deregulation?

§ Mr. Ridley
One of the conditions that I laid down for the disposal of NBC's assets was that managers and employees should be offered opportunities to acquire the whole of, or at least a stake in, the undertakings for which they worked. I very much hope that that will happen on a large scale.

§ Mr. Campbell-Savours
Is the Secretary of State aware that, however he chooses to split up the National Bus Company, the change will affect the orders for buses given to the National Bus Company at the moment, which in the main go to the Leyland National plant at Workington in my constituency? Is the Secretary of State aware that this arrangement will destroy the bus industry and that many people believe that it will be his Passchendaele? He will destroy himself and the credibility of his Department if he presses on with such ludicrous legislation.

§ Mr. Ridley
Over the past five or six years, the decline in the number of orders for buses has been very steep indeed. I do not have the figures here, but there has been a decline of about two thirds. It is time for us to change the regime under which the industry operates. If we do so, and if we try to find out what people want and allow bus companies to respond to the market, rather than imposing a pattern upon the market—the policy that has resulted in that disastrous decline in orders—there may even be an increase in demand in due course.

§ Mr. Stott
Might not the decline in ordering have some connection with the Government's withdrawal of bus grant?
What is the point of legislating to break up and to privatise the National Bus Company when the company and its subsidiaries have been successful and productive in their many areas of operation, primarily because of economies of scale in the areas of vehicle interchangeability, garage facilities, maintenance and so on? What is the point of legislating to destroy the principle of economies of scale?
Could the Secretary of State answer a further question—

§ Mr. Speaker
Order. The same rules must apply to the Front Benches as to the Back Benches. We can allow only one question.

§ Mr. Ridley
The withdrawal of bus grant—a policy embarked on by the previous Administration—may have led to some decline in orders for buses, but the major part of the decline has been caused by high pricing in many prosperous areas, which has lost the bus industry much patronage. We want to reverse that decline, and we believe that a little competition will bring down fares and attract more passengers on to the buses.
I do not believe that, over most of the range of bus operations, it has been established or agreed that there are economies of scale. Indeed, the bus industry is one of the few industries in which economies of scale are of very little importance.