Buses (Deregulation)

I will try to be brief. I must start with an apology. I have to go to a meeting with the Lord Chancellor, and he is not a man who likes to be kept waiting. I apologise to the Minister and to the Opposition spokesmen because I will not hear their winding-up speeches, but I will read them with great interest. I congratulate my hon. Friend the Member for Manchester, Blackley (Graham Stringer) on securing this important debate. It is true that deregulation has been bad for public transport, and I agree with much of what was said by the hon. Member for Southport (Dr. Pugh). I suspect that this is one of those debates where there will be a great deal of agreement across the Chamber, at least below the Gangway. We will get to hear what will be said at the other end. It is certainly true that bus companies tend to have things their own way these days. I agree that something of a cartel is working. In the Tyne and Wear area, Stagecoach and Go North East seem to dominate all the bus services to the exclusion of anyone else. As a result of deregulation, bus use is in serious decline. As my hon. Friend the Member for Manchester, Blackley pointed out, before deregulation, 48 per cent. of English bus trips took place in PTE areas and 27 per cent. in London. Now that has been reversed, with 27 per cent. of English bus trips in PTE areas and 44 per cent. in London. That has to have something to do with the fact that services in London continue to be regulated. As a result, costs are rising. The price of new tendered local bus services is rising way ahead of inflation. Between 2003 and 2004, the price rose by 12.1 per cent., three times the rate of inflation. That was a marginal improvement on the 15 per cent. rise between 2002 and 2003. The result is cuts in services. Approximately 35 per cent. of local authorities planned to make cuts to supported bus services by the end of the 2004–05 financial year in order to stay within budget. It is not all bad news: there has been very good news for profits. FirstGroup, made a £103 million operating profit from its UK bus division in 2003–04. UK bus operations account for 37 per cent. of FirstGroup's revenue and 48 per cent. of its operating profit. Returns of 11 per cent. on an investment are not unusual in the bus industry. My hon. Friend has referred to returns of as much as 50 per cent. It is indeed a profitable business. Reliability and the provision of services have suffered, not least in Tyne and Wear. Services west of Gateshead have been cut and priority services have had to be introduced at public cost in order to provide a reasonable service to the people in that area. Passenger journeys in Tyne and Wear have gone down by 56 per cent. since the deregulation of buses. PTEs are struggling to continue to provide decent services for people, as opposed to the profitable services that the bus companies seem exclusively to be interested in. Nowhere is the budget being constrained more than in the Tyne and Wear area. I refer my hon. Friend the Minister to the problems besetting Tyne and Wear PTE because of the Government's free fare system, which will be introduced in only a few weeks and is exclusively related to bus journeys. In Tyne and Wear, we are now £5.5 million short of the money needed to run free bus services next month. That is a serious problem. In order to make up the shortfall, the PTE will have to use £2 million of its reserves. It will have to cut concessionary fares for young people and students. Next week, it will have to announce cuts in services to pay for that Government-inspired scheme. That cannot be right and it is up to the Government to resolve the problem. I congratulate the Department for Transport, which has done everything possible to assist. In fact, it has provided £1.7 million to ensure that the free fare system can be transferred on to the metro. If the free fares had exclusively been for buses, the metro system would have suffered badly. That has resolved a problem, but we still have the shortfall to resolve. I, too, congratulate the Minister on her term of office and I wish her well for the future. Perhaps she could perform one great last service. Next week the Chancellor will announce this year's Budget. As last year's Budget brought in the free fare system, perhaps he could resolve some of the unintended problems with the scheme in this year's Budget. Not only is there a funding shortfall for the scheme in a number of local authorities, and most seriously in Tyne and Wear, but the scheme is related only to local authority boundaries. That is causing some difficulties. In this year's Budget, the Chancellor—the Minister might have a word with the Treasury—could introduce a national free fare scheme for pensioners. It could be administered by the Department for Transport. In one of its famous meetings with the bus companies, to which my hon. Friend the Member for Manchester, Blackley referred, it could negotiate to introduce a national system, so that pensioners could use the free pass wherever they went in the country on local bus services. That would be a great service. If the Minister can do that before she leaves, she will be remembered for ever.