HC Deb 17 May 2004 vol 421 cc794-802

Motion made, and Question proposed, That this House do now adjourn.—[Gillian Merron.]

10.30 pm
Mr. Graham Stringer (Manchester, Blackley) (Lab)

I am grateful for this opportunity to debate the catastrophic effects of the deregulation of buses in 1986 and the potential for re-regulating the bus system in Manchester and other metropolitan and county areas.

This is not a dry academic subject based on economic theory or the history of transport legislation; it is a real story of people in my constituency whose lives have been and are being damaged because of the ineffectiveness of the bus system. I could spend the time allotted to me for this Adjournment debate just going through my casework. There are hundreds of cases of people who are upset and complain that, because the 149 does not turn up, they have missed hospital appointments, or because the 151 service is withdrawn they have difficulty getting to work.

In parts of my constituency, fewer than a third of people have access to a car and therefore are particularly dependent on buses and vulnerable when those buses do not turn up. It is a little known fact that outside London, Manchester, at 22 per cent., has the highest percentage of people using buses. It is well known that one of the largest factors keeping unemployed people from employment is their lack of access to transport. It is estimated from surveys that 40 per cent. of people give that as a reason for not getting a job. Therefore, failures in the bus system have a terrific economic impact and a terrific impact on those who want to use North Manchester general hospital.

A particular problem in my constituency in north Manchester has been the extremely poor performance of First group in providing services. Some 12 months ago, in one week in particular, it had 600 failures, which meant that the bus did not turn up. That means that if only 10 people wanted to use each service, 6,000 people that week were stranded or had to wait for the next service. When the passenger transport authority considered its reliability performances, it was found that on its 10-minute services a third were not making the scheduled time, and on its 15-minute services 20 per cent. were not running to schedule.

On point-to-point fares, First group has higher fares on every rate and distance compared with Stagecoach in the south of Manchester. Its weekly ticket is more expensive, although some saver tickets are better than those of other bus companies operating in the area. But overall, its performance on reliability, punctuality and fares is appalling, and that is still the case. More recently, it has averaged 300 failures a week, so there was not just a peak 12 months ago. The service has been consistently bad.

First group's appalling performance created a crisis before Christmas—it has given a number of reasons to explain why that happened. It claimed that it did not have enough drivers; but when it recruited drivers, it did not have the engineers to start the buses, so the problem did not involve drivers because the buses simply were not there.

When the Transport Act 1985 went through this House, it was not envisaged that that would happen because competition was supposed to ensure that an ineffective, badly operated company, which First group is in north Manchester, could not succeed. Other bus companies should have come in, provided a better service and competed on fares, the market should have worked well and the passengers should have been happy.

That has not happened because the people who framed the 1985 Act got it wrong. Nationally, 85 per cent. of the market has been consolidated by five companies, and that situation has been replicated in Greater Manchester. In the north and west of the city, First group run between 80 and 85 per cent. of services, and Stagecoach has a similar dominance of the market in the south of the city. Although about 40 bus companies operate in Greater Manchester, two of them dominate the market. That is a cartel—a monopoly situation—and it was not supposed to happen under the 1985 Act. I am happy to call the situation a cartel, because if it has got a black, cold nose, it wags its tail and it barks, then it is a dog. The two major operators in Manchester engage in little competition and they form a cartel that disadvantages the travelling public.

What are the remedies? The 1985 Act did not work in the way in which it was envisaged. I have written to the Office of Fair Trading on a number of occasions, and it always asks, "Where is your evidence that there is anti-competitive behaviour? Where is your evidence that meetings have taken place between Stagecoach and First group to arrange those anti-competitive practices?" I do not have such evidence. The evidence is that services are poor and that competition is lacking. The OFT says, "The market should take care of that."

The Transport Committee has seen that the OFT does not have a high regard for evidence because the OFT relies on dogma and theory. When it argued the case for deregulated hackney carriages, we took evidence in the Transport Committee showing that where taxis are deregulated, against theoretical expectations fares increase beyond the average and waiting times increase. It simply ignored that evidence and said that competition would drive down fares and waiting times, which has not happened in practice, and it views bus services in a similar way.

I do not know whether you have seen "Planet of the Apes", Mr. Deputy Speaker. The OFT reminds me of the apes who were in charge of the planet and who believed that flight was impossible. When the human beings, who had travelled forward in time, made a paper aeroplane, the apes simply did not believe that it flew. That is how the OFT operates. For an integrated, effective transport system, we need integrated routes so that the timetables meet and people can change from one bus to another. The OFT says that that is anticompetitive and it tries to stop the co-ordination of services. It has failed within the bus industry, and it has no role in examining buses.

Let us consider the traffic commissioner, with whom I believe the Greater Manchester passenger transport authority is in communication. If it was effective in persuading her of the unreliability and lack of punctuality of First group, what are her remedies? They are to fine the company or tell it to remove the service. Removing the service would not be helpful to the people whom I represent when other groups prefer not to operate those routes. First group sometimes tells me that that is because its computer systems try to reduce the dead mileage between the destination and the garages. If that means that it stays on the same routes and does not compete much with Stagecoach and other operators, that is another method of getting computers to arrange an anti-competitive contract for the company.

What remedies exist in the Transport Act 2000? Can we have a quality contract that would enable the specification of service levels and fares and ensure that competition occurred at the tendering stage, with the public sector controlling the routes? I welcome the fact that the Under-Secretary is consulting on reducing the 21-month rule for introducing a quality contract when the scheme has been agreed. However, I do not believe that there is much hope that Greater Manchester or anywhere else can go down the quality contracts route because the hurdle in section 124 of having to prove that a quality contract is the only practicable way of implementing the authority's policies is simply too high.

In Coventry, which tried to introduce a quality contract, Arriva flooded the area with buses and claimed that there was no need. It might take three and a half or four and a half years to implement a quality contract. If the bus operators do not want it, they can change what they are doing to prevent the PTA from surmounting the legislative hurdle

What is happening in Manchester and Greater Manchester? Since deregulation in 1986, a drop in passengers of between 30 and 40 per cent. has occurred in all metropolitan areas, including Greater Manchester. There is potentially good news in the bare statistics, which show that, during the past three or four years, the number of people who use buses in Manchester has increased by 6 per cent. However, when we look into that, we find that it has made the position worse because the major operators, not only in Greater Manchester but in other metropolitan areas, are consolidating their services on the main routes, where they pick up more passengers, but withdrawing from the non-radial and cross-conurbation routes and from marginal areas. That leads to social isolation and makes using buses more difficult.

Companies are also withdrawing services from the weekends and times outside the rush hour. They put more and more buses on the radial routes and during the morning and evening rush hours. People who want to travel at other times are finding it difficult to do so. That led the National Audit Office, in its recent report on trams, to point out that it is not a sensible use of public money to have private sector operators competing against a light railway system. The Government have put money—I hope that they will put some more—into the tram system in Greater Manchester.

When bus companies consolidate on the radial routes, it means that, if the PTA wants to keep the routes going, it must put the route up for tender. The costs to the PTA in Greater Manchester have more than doubled to £13 million. There is little competition and the bus companies that previously ran the routes tender for them, usually at a considerably higher cost. That is the experience throughout the country,

We find the public sector supporting the buses through concessionary fares in increasing amounts—it is between £55 million to £60 million in Greater Manchester. Also, it is not widely recognised that, as the buses travel backwards and forwards more on the radial routes, they are doing more miles, even though they are going to fewer places. Even when passenger numbers were decreasing, the buses were making that first consolidation and doing more miles, which means that they get more bus service operator grant.

More money is going into concessionary fares—£60 million in the case of Greater Manchester—via supported tendered services, and the bus service operator grant is going up as mileage goes up, yet we are getting a worse service. In fact, public money is being used to isolate communities and make the public transport system worse. I do not find it tolerable that public money should be used in that way. It is a fact that throughout the metropolitan areas, 30 to 40 per cent. of the bus services' income comes from the public purse, but the passenger transport authorities and county councils have no control over how that money is used. The travelling public find that very difficult to understand.

I believe that bus services should be re-regulated, but they are opposed to that idea. That is not surprising. The one area that was not deregulated in 1986 was London. There, the bus companies get 8 per cent. of their income from the public purse, whereas those in the metropolitan areas get considerably more than that. Over the period since deregulation, and with very low subsidies, there has not been the loss of passengers, in Greater London that there has been in the metropolitan areas, and with more money going into the system, we are now seeing huge increases in the number of passengers using buses in Greater London. The Government have to answer this question: why, if a regulated scheme is good enough for London, is it not good enough for the rest of the country? It is better for the travelling public and for the public purse, people know what they are getting for their money, and the system is transparent.

I should like to finish by citing my right hon. Friend the Deputy Prime Minister, who was asked on at least two occasions when he came before the Select Committee whether it was possible to have an integrated transport system without re-regulating the buses. He was clear and unambiguous in his response, which was that that was impossible, because it is not possible to co-ordinate the services to the benefit of the travelling public. I agree with him that that is the case.

I hope that the Government will listen to the arguments and consider re-regulating the buses, whether through a pilot scheme or in some other way, because the pathway to a more sensible use of public money and to a more effective transport system—not just in Manchester but throughout the country—is through a different system from the one that we have. At the moment, the bus companies are laughing all the way to the bank. They are taking more and more money from the Exchequer and providing a service that is less and less good for the travelling public. That is leading to social exclusion and keeping people from jobs and from access to health and education services.

I do not expect my hon. Friend the Minister to stand up and say, "Yes, we will do that tomorrow", but I hope that he and the Government realise the power of the arguments that have been put tonight and that the current situation is not a sensible way of providing a transport system or of using public money.

10.49 pm
The Parliamentary Under-Secretary of State for Transport (Mr. Tony McNulty)

I congratulate my hon. Friend the Member for Manchester, Blackley (Mr. Stringer) on securing this debate, on his contribution to the discussion on bus regulation and on recognising the importance of buses to Manchester. I can cheerfully say that I shall not disappoint him, as I am not going to say, "Yes, you can have all you want." The significance of this debate lies in a recognition—much overdue in many areas of the debate on transport—of the importance of buses.

Buses provide two thirds of all public transport journeys, and they are key to making public transport a viable alternative to the car. As my hon. Friend suggests, they also play a vital role in tackling congestion and, crucially, promoting access and inclusion. I welcome this opportunity to set out what the Government are doing to make buses central to our integrated transport strategy.

My hon. Friend alluded to the fact that buses can deliver and are beginning to do so. We have set the target of securing a 12 per cent. increase in the use of local public transport—buses and light rail—by 2010, while improving the accessibility, punctuality and reliability of services. The latest figures for England show a 3 per cent. overall increase last year, including London. Despite my hon. Friend's caveats, Greater Manchester has contributed to that, with bus patronage up 6 per cent. since 1999–2000. I congratulate both cities on that.

To dwell on the wider context for a moment, progress is already being made on fleet modernisation. The average age of the bus fleet has fallen from 9.6 to 8.1 years over the past 10 years and some 30 per cent. of full-sized buses are accessible for wheelchairs. As my hon. Friend will know, there have been significant advances in CCTV and other dimensions, not least real-time information equipment.

Of course, to achieve patronage growth and service improvement, a number of key factors have to be brought together: investment in traffic management, quality, partnership and the appropriate regulatory framework all have a role to play, as indeed does strong political leadership.

My hon. Friend has made the case for re-regulation, and I listened to his arguments carefully. I know others share his view. I certainly agree that it is essential that a city such as Manchester has high-quality bus services as part of a modern, integrated transport system. We are keen to help to create the conditions to make that happen, but we need to look closely at how best to go about it.

The fully tendered system, which my hon. Friend referred to and which operates in London, has produced impressive increases in bus patronage. Ken Livingstone has shown that buses can deliver a quality service and help to tackle congestion when combined with traffic restraint. I welcome that progress, but London is unique in its size and complexity, and it has one of the largest and most comprehensive urban transport systems in the world. Furthermore, as my hon. Friend will know, London was at a different starting point in terms of regulation. We have to think carefully before assuming that replicating the London arrangements is a necessary or sufficient condition for delivering better bus services elsewhere. It is important to recognise both that the existing regulatory framework has strengths and that that system has not been tested to the extremes or as much as could have been the case. The existing regulatory framework has the scope to encourage innovation—responding to customer needs, providing choice and attracting new custom. Many operators have risen to the challenge; indeed, Stagecoach Manchester won an award for its Unirider summer online ticket scheme at the 2003 bus industry awards.

Our experience is that the effectiveness of bus services depends on the level of partnership between local authorities and bus operators. Partnership has shown that it can deliver in some places, and we are keen to build on that. The Bus Partnership Forum has been helping to take this forward by producing many useful resources and sharing best practice.

Where that is not happening, the existing legislation makes provision for strengthening the hand of local transport authorities. The Transport Act 2000 offers a number of avenues for local authorities to pursue if appropriate. As my hon. Friend said, those include statutory quality partnerships and quality contracts. The latter allow authorities to plan and control bus services within a designated area. That can include fares, routes, timetables and driver training.

The legislative framework is already in place. The task is to make it work. We are keen to remove barriers to the introduction of a quality contract where the criteria set down in the 2000 Act can be met, and I am grateful for my hon. Friend's kind words on the consultation to reduce significantly the 21-month statutory minimum waiting period before implementation of a scheme. We are analysing the results of that consultation, and we will shortly publish for consultation guidance on applying for a quality contract. That is important, not least because metropolitan and other areas have suggested that the 21-month period has been an impediment to the regulatory framework, and we are happy to consider that.

My hon. Friend kindly made much of the amount of money going into bus services in Manchester and elsewhere, in both revenue and capital terms. That is an important part of the mix of factors that have to be brought to bear. In December, we announced a £1.9 billion capital settlement for local transport—an increase of more than £200 million on the previous year, much of which is for bus-related projects. Indeed, we have approved £26.3 million for the Greater Manchester quality bus network.

I certainly take to heart my hon. Friend's points about social inclusion. More funding is being provided for urban and rural bus challenges. Greater Manchester was notably successful in the 2003 awards, securing £2 million for six new schemes, among them precisely the sort of schemes that fill the social inclusion gap to which my hon. Friend referred. It is not the fault of people living in communities on a particular side of our great towns and cities if, for whatever historical reason, the key employment activity on that side of town has diminished or entirely gone so that most economic activity is on the other side of town. We are working closely with operators and local authorities to fill those gaps where restoring a fully fledged route would not be appropriate.

I totally agree that it is vital that we get the best use out of the public funding that goes into buses in terms of achieving our objectives. We have been looking at that in the bus subsidy review and the current spending review, the outcomes of which are due this summer. I urge just a little patience on my hon. Friend in that regard, but it is right and proper given the amount of money going in from a range of sources, including bus service operator grant and the challenge funds, that we should look to see whether we are getting entirely the service and return that we need for that investment.

I entirely agree that reliability is crucial. I am aware of the service delivery issues raised by my hon. Friend with First in northern Manchester. As he said, some of the problems have been caused by staff shortages and others by the absence of vehicles. The traffic commissioners have a vital enforcement role, and they are currently working with the bus partnership forum on gleaning better data about bus performance. I hope that Greater Manchester passenger transport executive and First can work together to ensure that users experience better service levels in problem areas.

Reliability also depends on local traffic conditions and traffic management issues such as congestion. We are encouraging local authorities to implement bus priorities to help tackle that. My hon. Friend will know that there is at best a mixed picture nationwide on that, and I believe that keenly focused operators, sharp political leadership and such things as bus priority measures are equally important to securing the service that we need. In addition, the Traffic Management Bill currently going through its parliamentary stages contains provision to encourage the smooth flow of traffic in local areas and reduce disruption caused by street works.

In recent months, we have had discussions with the Greater Manchester authorities, and others around England, about the focus of their next local transport plans. I am heartened by the amount of common ground that we have found. Greater Manchester has made huge strides in recent years—not only in patronage, although I take on board what my hon. Friend said about that. The new night bus has been very successful and trials of yellow buses are showing that they can improve safety and cut congestion.

The Government's vision is of an integrated system that encourages the use of public transport as well as offering choice. Buses are essential in that regard, but we need the right framework of regulation. We are looking in the round at public subsidy for buses.

I thank my hon. Friend for his comments and his contribution, and I wish him well in his desire to see buses playing a greater, more efficient role in Manchester as they fulfil their role in the integrated transport system that Manchester and all our urban and rural areas deserve. Whatever discussions we have about the regulatory framework, it is absolutely clear to the Government that buses are central to all that we are trying to do, not just on public transport and integrated transport, but in terms of exclusion—

The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Eleven o'clock.