Bus Industry

rose to ask Her Majesty’s Government how they propose to address the present problems facing the bus industry. The noble Lord said: My Lords, in considering the present situation in the bus industry, I will attempt to cover the way in which the industry is at present organised and run, and my noble friend Lady Scott will, in winding up, deal with the external environment within which buses are operated inthis country. We will therefore attempt to be comprehensive and constructive in our approach. We are both well aware of the Government’s proposals in the White Paper Putting Passengers First, and we hope to add to the debate begun in that document. We are well aware of the continuous decline in the use of buses throughout the country—with one or two notable exceptions—which has been affected only a little by deregulation, despite vigorous propaganda to the contrary. We are well aware that buses have to contend with a road network that is congested with traffic, parked cars and delivery vehicles. We are also aware of the advent of the impact of the UK’s adoption of the European Social Charter, which brought with it legislative change that, in the five years leading up to 2008, has taken up a vast amount of management time and unsustainable added costs. I plead with the Minister to accept that officials who negotiate on behalf of the UK on drivers’ hours do not understand the impact on the bus sector. I ask him to ensure that in all future negotiations officials are accompanied by a professional who intimately understands the industry and what is involved in the details of bus operation. That is not much to ask and it would bring professionalism into the negotiations. We need to be represented at the table by people who really know and care about the outcomes. I would hazard a guess that of the typical 9 to 10 per cent per annum cost increases faced by the industry, about a third emanates from these regulations. That ought to be a matter of concern. Fuel costs, insurance costs, above-average wage rises and congestion account for the rest of the cost increases, but a pause or moratorium in new legislation and the inclusion of a professional input at the negotiation stage would be a great advance. I turn next to competition. The White Paper stated that the objective of the deregulation of ““on road”” competition was to provide more attractive services. Generally speaking, that has not been realised. In many places, territorial monopolists are offering a service of old vehicles, high fares and poor and declining frequencies, while many smaller operators who would enter the market are cowed and afraid to enter because of the likelihood of competitive action by the bigger companies. That is a form of predation by reputation, a practice which should be outlawed by the competition authorities but is not. Indeed, it is actually supported and encouraged by the Office of Fair Trading because of its definition of the market in the economic appraisals that it sometimes—but always too slowly—puts into effect. I suggest that a proper test would be for the Office of Fair Trading to ask whether the reaction of an incumbent operator is consistent with its pattern of behaviour in the rest of the country. If that is not the case, the OFT should rule against any retaliatory action by them against a competitive threat. The whole market needs to be opened up, and operators in all transport sectors need to realise that the real competition comes from the private car. Co-operation and co-ordination in the interest of passengers need to be the watchwords, and any proposals for joint services, ticketing, timetables and so on should be subject to the simple test of whether they are in the public interest. As the White Paper claims in its discussion of quality contract schemes, the public interest test is the best way of determining whether arrangements suit the bus user. We then move to the subject of who should make the test of the public interest. In my view, it should be a reformed and invigorated version of the traffic commissioners. We must first ask whether the present stature, training and background of the commissioners are right. They also need sufficient locally based staff. I realise that the Government are currently advertising for a number of replacement commissioners. Perhaps that process should be suspended while we are discussing and, I hope, implementing fresh arrangements in the bus industry. Perhaps traffic commissioners should in future sit with two deputies, one who may be versed in competition matters and the other an experienced and respected operator from elsewhere in the country. They would guide the commissioners in matters such as whether a quality contract is appropriate and the appropriateness of proposed changes in registrations and their competitive implications so that the interests of actual and potential passengers are given the most weight. That would include the right to vary proposed registrations that run immediately ahead of those of a competitor and other undesirable practices. I know that many good small operators would be willing to engage in the market to give a better service to customers if they could be sure there would beno predatory response from the big territorial monopolists. Such a response would lead very quickly to the small operator going bankrupt because the bus industry is largely a cash-flow business. We welcome the idea, put forward in Putting Passengers First, of empowering the traffic commissioners to summon before them the local authorities that fail to manage the road network to allow buses unhindered access. Finally on this subject, there should be stronger powers if an operator fails to maintain his fleet well. I draw the Minister’s attention to what has gone on in Greater Manchester, where at last a company that entered the market with a thoroughly unsuitable fleet of vehicles has been put off the road, though not until a great deal of damage had been done. The stronger powers should include banning an operator from routes for long enough to allow a competitor to establish itself in the market. I suggest that the traffic commissioners should use their powers to the extent that operators who have had persistent maintenance failures are banned from routes for two years. A final appeal to the Transport Tribunal would have to be available, but only after clear guidance had been set down about some of these issues.