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Rural Transport

Volume 447: debated on Tuesday 20 June 2006

May I, through you, Mr. Illsley, thank the Speaker for granting me this debate? I have tried for a long time to secure one on this subject, and I am happy to have achieved it. I welcome the Minister to her new portfolio, and I am happy to see her here. She has escaped the Whips Office, and I hope that she has many happy years in her new post.

I shall highlight a number of crucial issues relating to the transport needs of the rural communities in my constituency. They have regularly been the subject of discussion at coffee mornings in villages throughout my constituency, as well as in my postbag. I wish to focus on the provision of public transport and the problems that can be caused to isolated communities when there is one public transport provider. I shall also suggest some solutions to the problems that surround the provision of rural bus services. I will argue that bus operators should not be completely free of regulation, but that they should be subjected to greater openness. I will suggest that bus franchising should follow the same model as rail services, which will ensure that bus companies provide a useful service to the public.

The rural communities in East Cleveland share a common historic and geographical pattern. They are small villages that date from the 19th century—a time when ironstone mining was booming. With industry now long gone, many people in those villages and small towns have to commute to and from employment elsewhere in urban Teesside. They also regularly have to travel to Teesside or nearby market towns such as Guisborough and Redcar for their shopping and social life and to meet friends and relations.

Many of my constituents in these areas do not own cars. In some of the smaller, more deprived communities, access to cars is very low. In some cases, up to 42 per cent. of households have no access to a car. Consequently, they are forced to rely solely on buses. Bus services are therefore absolutely crucial to their everyday lives.

Approximately 95 per cent. of all bus routes in the area are under the control of one bus company—Arriva North East. The 5 per cent or so that are not all belong to small niche operators who provide buses for school and hospital runs under contract to the local council and minibus services on some estates.

Arriva recently introduced a number of radical changes to its local service, with serious repercussions for my constituents in East Cleveland. As a commercial operator, Arriva is fully entitled to make changes to its services, but the manner in which it did so has been a cause of concern among my constituents. The changes are based on a consultant’s report that was commissioned for the Tees Valley joint strategy unit. The unit is a Teesside-wide organisation made up of all the local councils and its remit is to develop Teesside-wide planning and transport policies.

On the whole, the report was acceptable. It stated that transport patterns on Teesside had changed and needed addressing by the area’s bus companies. It then suggested core routes across all of urban and rural Teesside. Crucially, however, it also recognised that the changes needed to be implemented with care and that structural elements should be in place before any changes were made.

The changes were to be introduced over at least a year and based on setting up a quality partnership between all the local authorities, bus operators and other stakeholders. That was to allow local councils to develop a pattern and build up financial provision for their tendered services to supplement the core commercial network.

I have to say, however, that Arriva completely ignored many of the report’s recommendations by announcing that it would adopt the core service model within weeks. That meant that many communities found to their horror that there were to be large-scale cuts in their bus services. Those cuts would be partnered by reductions in frequencies, changes of route and, for some communities, a total loss of service.

A recent survey by Redcar and Cleveland borough council found that 10 per cent. of local residents use a local bus service every day and that another 14 per cent. use one once a week. It also found that the number of people using local bus services regularly was considerably higher in areas where the population was older than average and on a lower income. That is where the cuts have really hit home.

Letters from concerned constituents affected by the changes poured in to my office, the local council and Arriva itself. I was particularly distressed to learn that schools were faced with a problem because the new times did not meet the needs of their pupils. I have received correspondence to that effect from both Huntcliff secondary school in Saltburn-by-the-Sea and Laurence Jackson secondary school in Guisborough.

In addition, timetable information was available only days before the new routes were to operate. Local employers found that key staff were having to alter hours of work or to adopt new modes of transport simply to keep their jobs, but Arriva has not dealt with any of those issues, despite strong pleas from me, the local borough council and other organisations and groups in the East Cleveland area. It could be argued that if one bus operator—in this case, Arriva—behaves in that fashion, that will create a gap for a competitor to capitalise on what may be seen as a bad judgment by Arriva. However, that has not happened, for a number of reasons.

On Teesside as a whole, there are two major bus operators: Arriva and Stagecoach. Although I do not allege that there is a monopoly, I do find it fascinating that those major multinational transport companies, with all the resources available to them, do not seem to compete with each other in a meaningful way. For evidence of that, I examined a copy of the last local bus timetable guide issued before the latest changes. Although Arriva operated no fewer than 38 separate services in the borough, Stagecoach operated only one solitary bus route. That was a small late-evening-only tendered service covering a section of route operated by Arriva for the rest of the day.

Such domination can lead to an arrogance of power and an unwillingness to respond properly to complaints and observations from passengers. In recent weeks I have been receiving plenty of both from disgruntled Arriva passengers. It is clear from the letters that, following the latest sweeping changes, things are little better. There have been numerous stories of missing or late-running buses and cancellations without warning. Additionally, there has been increasing use of elderly, small and unsuitable buses on many busy routes.

The survey by Redcar and Cleveland borough council found that, across the borough, only 22 per cent. of people are satisfied with their local bus services. In addition to the poor standard of the overall service provided, there have been reports of constant fare increases.

Arriva has devised a standard response to such complaints, which is to suggest that if the complainants are not happy, they should approach the local council—in this case, Redcar and Cleveland—and get it to subsidise journeys by putting in tenders. Although that sounds simple, it certainly is not. As a former councillor, I am well aware that councils have limited financial resources. In this case, the sheer scale of the Arriva cuts was such that the local authority had no further financial resources available to it. This is a real problem and is replicated up and down the country.

When the bus industry was deregulated by the late Mr. Nicholas Ridley, the intention was to liberate bus companies from the oppressive state to allow them to flourish in a more competitive environment. That vision depended on the notion that the routes catering for existing and potential demand would emerge and the market would meet the needs of the travelling public. However, the vision never became a reality.

The bus industry is now dominated by the so-called big five: Arriva, Stagecoach, National Express, First and Go-Ahead. According to the passenger transport executive umbrella group, those companies operate about 80 per cent. of all bus journeys in the country. However, their record is not good. Outside London, bus use has declined by about one third since deregulation in 1986. The cost of using the bus has escalated. Since 1985, it has risen on average by one third, while the cost of private motoring has been largely static. The extra costs have been borne, by and large, by people with no alternative to the bus—those who cannot afford cars and are therefore left at the mercy of the bus companies. According to the passenger transport executive, 60 per cent. of all bus journeys are made by people who have no private means of transport available to them.

Those figures are true of the local situation as well. In the wider Teesside valley there are 42 million bus journeys every year, reflecting the fact that car ownership in the area is lower than in any other part of the UK. That is a figure in decline, however; based on official council estimates, bus travel in the borough of Redcar and Cleveland dropped by about 8 per cent. between 2003 and 2005. The net result is that bus companies that are in a dominant market position have to adopt two distinct strategies. Either they can invest heavily and can market intensively where—and only where—there may be untapped potential, or they can prune back services and cut routes and buses.

Arriva has opted to take both options, as is clear from its half-year report for 2003, in which it said:

“Outside London, our approach to what is a mature market is to focus on a twin track strategy of targeting investment to deliver growth and eliminating low margin and loss-making routes.”

It does not take a genius to understand that in rural areas such as East Cleveland it is likely to be the latter approach that will be more attractive.

So what can be done? For a start, I suggest that the concept of a total free-market approach to bus services be reviewed. Buses are an absolutely essential public service, and many people—usually those who cannot afford cars—are completely dependent on them. Other private operator services that are used by the public have to live either with a degree of regulation, or with direction that lays down a public service duty. That is the case with utilities, gas, water and power, and is also embodied in the way that passenger rail services are managed, through the setting up of the Department’s franchises which are overseen by the rail regulator, and through the subsequent bidding for those franchises.

As a minimum requirement a duty should be placed on bus operators to support services in some of the less commercial operation times. If an operator intends to run a commercial service from 8 am to 6 pm, it should also be required to operate some early morning or evening services on the same route, if there is a demonstrated need. That would ensure that operators would begin to see their operations as a public service that addressed social needs and concerns, such as traffic growth.

There must be far more openness in the bus industry. There is a strong local suspicion that many of the services axed by Arriva were not as unprofitable as the company maintains. One axed service—the No. 71 from Guisborough to Saltburn and Eston—was regularly criticised for being overcrowded. The books should be opened to local authorities on the basis of commercial confidentiality, so that they can see that any decision they make to offer tenders for services are based on hard economics and reality.

We could go a lot further to re-regulate provincial bus services, and I believe that there is moral justification for that. Taxpayers make a great contribution to the bus operators, so it is wrong for those operators to act merely on the basis of making profits. The recent Public Accounts Committee report on the bus industry said that up to £359 million was paid to bus companies in the form of operators’ grants, which subsidise their fuel costs. The Committee estimated that the operators will also receive £350 million in the shape of payments for concessionary fares and bus passes for old-age pensioners, disabled people and school students. Add to that the transfer payments to local authorities for them to subsidise tendered routes and we have a huge sum of public cash going to the bus operators with little in return.

On that basis, we should take a bold step and look to the introduction of bus franchising in England. That could follow the model used for rail services and be overseen by local authorities. Franchises could be as big or as small as is needed. They could cover a conurbation, a local authority area or even a single town. They could combine the urban core services and purely local services for outlying estates and communities. They could be based on contracts that stipulate core needs and set levels of frequency, accessibility, integrated ticketing and customer care. That is exactly the model used for rail services, and could be used for bus services.

Many of my constituents in the East Cleveland community have been badly let down by what they see as the unfair use of Arriva’s market dominance. Many people in that area do not own private cars out of economic circumstances, not choice, and in many car-owning households family members do not have access to the car at times when they need to travel. Those people are looking for Government action to ensure fairness and the reintroduction of a public service ethos into the bus operation. That would certainly work in conjunction with the Government’s drive to encourage people to use public transport to reduce road congestion and, more importantly, to protect the environment. I believe that that public service ethos could be reintroduced easily into the bus services, but we need action and commitment from the Government for it to happen. I look forward to the Minister’s reply.

I congratulate my hon. Friend the Member for Middlesbrough, South and East Cleveland (Dr. Kumar) on securing the debate. He has provided an opportunity to discuss what I believe is an important subject: rural transport, and how its quality, or indeed lack of it, affects people and their day-to-day lives. I know that my hon. Friend is a dedicated and effective representative of his constituents on the subject before us and on many other subjects dear to their hearts.

It is essential that people in rural areas can get out and about, whether to their jobs, shops or services or to friends and family, and many of them rely on cars to do so. However, there are also those without cars—nationally, one in 10—who rely on public transport. Like my hon. Friend, I believe that it is crucial to ensure that they do not suffer exclusion because of poor access to transport. My hon. Friend focuses rightly on buses, and so shall I, because they are the main means of transport for people in rural areas. I shall comment on buses, first in general terms, and then more specifically.

As we know, since the 1950s, bus patronage has been falling, largely as a result of car ownership. That is particularly noticeable in rural areas, and as a result services there have become increasingly difficult to sustain. In recognition of that, rural bus services now benefit from a range of Government support. All operators receive a bus service operators grant, which provides a rebate of some 80 per cent. on fuel duty. For environmentally friendly fuels, that rebate is 100 per cent. Of course that will contribute to the financial viability of many rural services, including those in my hon. Friend’s constituency.

We recognise, however, that conventional bus services are not always the most appropriate way to meet the needs of people in rural areas. In recognising that, in 2002, we extended the eligibility of the grant to community transport operators, and, in 2004, demanded responsive buses.

It is also worth noting that since 1998 rural communities have also benefited from the rural bus subsidy grant, which has provided £32 million a year to local authorities for new bus services in rural areas. The grant level has been increasing and it is now providing more than £54 million across England, funding about 30 million passenger journeys a year. The grant can be used to support not only conventional buses but a wider variety of flexible bus services, such as those that deviate from their route on demand—in my areas they are provided through Lincolnshire Interconnect—and demand-responsive buses, which are fully pre-bookable.

We have also used Challenge and Kickstart funding to support innovative schemes in rural areas. My hon. Friend will know that Redcar and Cleveland received over £150,000 of rural bus Challenge funds for the East Cleveland dial-a-ride initiative, to provide an extra dial-a-ride vehicle specifically for disabled people in rural areas. Since 2003, we have used a new approach called Kickstart to provide pump-priming for services with the potential to become self-sustaining after three years. My hon. Friend will also know that under Kickstart, Redcar and Cleveland received over £130,000 to enhance service 81, between Redcar and Guisborough, bringing better travel for residents of those towns and villages.

In addition to what I have outlined, we provide all local transport authorities with capital funding through the local transport plan system, in which a block of funding is provided to cover road maintenance and integrated transport. It is for local authorities to decide how that allocation is best spent, but some of it will be used to support bus services with the provision of bus stops, bus lanes, dial-a-ride and other flexible transport services.

Over the past six years, block LTP funding for Middlesbrough has increased by 95 per cent. and that for Redcar and Cleveland has increased by 89 per cent. As part of their second LTPs, which were delivered to the Department in March, all authorities have prepared an accessibility strategy. They were asked to work with local service providers to prioritise the problems that local people face in obtaining access to key services, such as those described by my hon. Friend.

I just want to say a word about the importance of free off-peak local bus travel for people aged 60 and over, and for disabled people, which my hon. Friend mentioned. I am sure that he and his constituents welcome the fact that the entitlement will be extended further, to national bus travel, from April 2008, for which the Treasury has earmarked an additional £250 million a year. I anticipate that in my hon. Friend’s constituency alone that will benefit more than 17,000 people. The scheme will help to boost bus patronage in all areas and may make some rural bus services more viable.

My hon. Friend made some specific points about his constituency and I want to answer those. He is concerned that Arriva provides the vast majority of all local bus services in the area. That situation is not unique to his area, or to rural areas, but I agree that 95 per cent. is a very high figure. As my hon. Friend is aware, there is nothing to prevent another operator from challenging the situation by registering services in the area. If Arriva is, as my hon. Friend suggests, giving up profitable services it would surely be an attractive proposition for other operators to take them on.

My understanding of the situation as described by my hon. Friend is that the Tees Valley local authorities have carried out a review of the bus services in the area, in consultation with the bus operators, and have found that many of the traditional routes do not really serve the travel needs of today. Their intention is, by working together, to devise a better way to serve my hon. Friend’s constituents. I know that the local authorities have plans to improve the bus infrastructure further as part of that work. That is the kind of co-operation that I am looking for and want to support and encourage. Neither operators nor local authorities have a monopoly on wisdom about where buses are needed and who will use them, and I would expect them to consult the local community.

Of course, any change in a bus network will result in losers as well as winners. My hon. Friend is realistic, and he knows that we cannot expect buses to be provided everywhere and at every time. Local authorities are best placed to decide how best to use their financial resources to support services that are not commercially viable. Such support could include subsidising services to replace those that are withdrawn.

Bus operators are entitled to protect commercially sensitive information, but we encourage them to provide data in confidence to local authorities in the interests of better performance. We have given local authorities the tools that they need to work with bus operators to improve services, and those include quality partnerships and quality contracts.

I am concerned about the situation that my hon. Friend describes. In view of that, I shall ask my officials to raise the issues that he brought to my attention with Arriva through the north-east bus partnership forum. I urge my hon. Friend and, indeed, any other hon. Members who know of problems with access to public transport in rural areas to bring them to the attention of their local authorities, especially as many of them are already working hard to try to address problems through their local transport plan.

My hon. Friend may be interested to know that my officials and I are reviewing future bus subsidies and many other aspects of bus policy. I assure him that I shall bear in mind his useful and carefully considered contribution, for which I thank him.

Question put and agreed to.

Adjourned accordingly at three minutes to Two o’clock.