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Plymouth CityBus

Volume 497: debated on Wednesday 14 October 2009

Plymouth CityBus, with its cheerful red and white livery, is as much part of our great city’s identity as the iconic red and white lighthouse, Smeaton’s Tower, that stands on Plymouth Hoe. One of the many things that makes people in Plymouth angry about the proposed sell-off of the bus company by the Conservative council is that a sale to a rival company could rob us of that distinctive part of our city’s identity. People have an attachment to and an affection for their bus company. People like the red and white buses because CityBus has a successful track record of providing good, efficient bus services. As Jack Dromey of Unite said just a moment ago, it is one of the finest bus companies in the land. This debate is not about a bus company that has failed and so has to be put into the private sector, but about one of the most successful bus companies in the country.

CityBus was formed in 1986 and is wholly owned by Plymouth city council, making it one of only a dozen or so municipally-owned bus companies left in the United Kingdom. It employs nearly 500 local people, and some of its very fine workers have joined us today. The company has an annual turnover of approximately £17.5 million and although an annual dividend is returned to the council, importantly, profit is continually invested in vehicles and services. Through careful stewardship of resources over the years, the company and the fine people who work for it have come up with a recipe that ought to be seen as an example of what works.

CityBus provides Plymouth with a high level of access to bus services, despite how spread out the city is. More than 95 per cent. of people in Plymouth—I think it is as much as 98 per cent.—are within 200 metres of a bus stop. In similar cities, the distance is 400 metres. I hope the Minister agrees that the service is one that many would envy. We must surely aspire to create more such services if we are to meet the urgent demand of our climate change targets.

The CityBus recipe is sensitive to change. The success of the 60 or more buses that run every hour between Derriford and the city centre allows other less well used routes to survive. It is ironic that the bus war that was prompted by the council’s proposal to sell CityBus is attacking the core of the successful recipe for sustainable bus services in Plymouth—that is, the successful routes.

The company works well on prices. For example the dayrider ticket is good value compared with those in other cities. That is possible because CityBus, as a publicly owned company, has used its competitive position to benefit everyone. It currently has 60 per cent. of the competitive market. If CityBus is sold to a rival bus company, an even fiercer price war is likely, as has been seen in other cities. Although that might drive down prices and appear to be good for customers in the short term, in the longer term it would probably lead to the emergence of one dominant company. If such a company was not in public hands, as sure as night follows day, it would end up stifling competition and keeping prices high.

It is ironic that CityBus, which is a successful recipe that delivers good outcomes to all, is being put at risk just as the problem of bus wars leading to dominant companies has emerged all over the country. There has been a market survey by the Office of Fair Trading and a consultation is ongoing on the matter. If that leads to a full-blown investigation by the Competition Commission, it would be well advised to look at how the sustainable bus services work in Plymouth.

CityBus provides sustainable bus services that are good for older people. I have described the good network with most people living within 200 metres of a bus stop. That is much better than other cities with denser populations, which should make it easier to provide such a service. Goodness knows what would happen to the level of access in our city if the bus service was sold off. It is clear that any loss of access would hit older people, especially older women, hardest as they rely more on bus services.

The issue also matters to younger people. A company that had to serve multiple shareholders rather than the community through the proxy of city council ownership would almost certainly result in a reduction of school buses. At present, CityBus provides an additional 12 buses to provide extra capacity on school runs during peak time. The city council is highly unlikely to be able to support those additional services. If it did, the money would not come from the current subsidy. That is just one aspect that makes the proposal so stupid. The knock-on effect would be that general bus services became more crowded and roads would become more congested as people switched back to cars for school journeys. The school bus service removes more than 4,000 car journeys from the road each week—that is 160,000 journeys in a school year, which all take place at peak times. The proposal would also affect the target to increase bus use from 16 to 20 per cent. Need I say more? This crazy proposal will be bad for young and old alike.

We must rise to the steep challenge of transport playing its part in the immensely stretching targets set out in the Climate Change Act 2008. The silo mentality of the Tory administration in Plymouth will drive a cart and horses through a valuable green asset.

The Prime Minister is going to put assets such as the Dartford toll crossing into private ownership. Is that not inconsistent with the points that the hon. Lady is making?

I will touch on that point in a moment. However, all politics, including local politics, is a matter of priorities. That applies to assets as much as it does to anything else.

The silo mentality of the Tory administration in Plymouth will drive a cart and horses through an incredibly valuable green asset, which has been developed through cross-party stewardship over several decades. CityBus is a green asset that not only provides good access to public transport for a high proportion of the population, but invests its profits to that end. It is not under pressure, as a private company would be, to distribute a higher proportion of its profits to shareholders. That means that all vehicles operate on ultra-low-sulphur diesel fuel and all new vehicles comply with the latest emission levels. It is ahead of the curve in investing in Euro 4.5 and 5 vehicles.

Unlike most other bus companies, CityBus still employs a pool of local engineers, which is a sustainable way of ensuring high-quality maintenance and reliability. A pool of local, skilled employees ensures that engines and parts are maintained to high standards and that an environmentally unsustainable waste of parts and engines is avoided. There is also high-quality performance in terms of emissions. Most companies that might express an interest in taking over from CityBus do not have engineering or coaching as part of their core business, so both activities would be likely to stop if it were sold. That would result in the loss of 10 per cent. of the jobs. The engineering work would have to be done elsewhere and it is unlikely that the win-win balance of engineering and sustainable maintenance practices would be preserved.

Plymouth’s successful bus network is the result of a delicate balance and a special recipe. The way in which the council has gone about what it describes as

“seeking to place a value”

on the company has upset that balance. The early signs of the bus war that has been prompted must surely be depreciating the value of CityBus. That is not exactly degree-level economics. We have seen negligent stewardship not just of an outstanding environmental asset, but of taxpayers’ money. There must surely be a case for someone in the Audit Commission investigating whether proper consideration was given to the repercussions of selling the company at a time when market values have plummeted, a bus war was entirely predictable and environmental assets should be most particularly valued and protected. Councillor Tudor Evans, who is Labour’s leader on the council, specifically drew attention to that not just once but several times before the decision was taken to proceed.

Of course, Plymouth city council has to raise money in the face of difficult economic circumstances and the likelihood of tighter public spending. However, I say to the Minister that it is a question of priorities and there are other ways of saving money. The capital programme could be engineered differently, or other assets could be sold. It says a lot about Conservative priorities in Plymouth that they have chosen to target CityBus without setting out why it is a priority for disposal over other assets.

No. I am sorry, but I have only a small period of time, and I think that other hon. Members may wish to intervene.

The decision to proceed comes from a silo mentality that pays no attention to the consequences for people, whether they are young or old customers, the environment or the service provided. A silo mentality has been compounded by a seemingly cavalier disregard for using up to £962,000 to prompt a bus war, which has made bus users and non-bus users alike angry and worried.

The union Unite has done a cracking job in organising a campaign to rally behind CityBus. It has overwhelming support from people in Plymouth, including many Conservative voters and Plymouth’s Labour councillors. Our priorities are clear: unlike the Conservatives, we will support a tried and tested company that is working. We will support the young, the elderly and those on low incomes, who rely on these services and who would lose out if another bus company were to run them. We will support environmentally sustainable transport and we are prepared to put our money where our mouth is in relation to that.

To spend £962,000 of Plymouth people’s money to investigate the sale of a bus company that people do not want to be sold is wasteful, arrogant, damaging and it is already upsetting a recipe that has worked well in Plymouth for a long time. Why spend so much money now on a valuation? It is perverse.

I am grateful to the hon. Lady for allowing me to contribute to the debate. I certainly accept that CityBus is a very impressive company, but does she agree that although it is owned by the council, it is not run by the council; it is run by its own board. Why on earth would a private company spend millions on buying CityBus and then slash its routes and reduce its services in the way she has described? I am bound to ask whether she is just scaremongering and using the issue to launch her election campaign.

I launched my election campaign in 1997 and have not stopped since. I do not think the hon. Gentleman can have listened to what I have said. If he needs to study what makes up the economic argument I am advancing, he need look no further than the market survey of the Office of Fair Trading, which may be about to prompt a full blown Competition Commission inquiry. I would be delighted to brief him on the detail of how the margins and the profits are deployed in a different way when a company is wholly publicly owned—in fact, I am about to come to that.

According to Marc Reddy, who is the managing director of First Devon and Cornwall—one of two companies to have withdrawn their initial interest in the proposal—the bidding process set up by Plymouth city council to find out how much the company is worth is a “shambles” and could end up costing “many millions of pounds.”

My hon. Friend has made the range of opposition to the sell-off that exists in the city clear and flagged up the critical reaction of the managing director of one of the other bus companies. In fact, Mr. Reddy has also expressed concern that the whole management exercise has been a “total disaster” and that it could cost the taxpayer millions of pounds—far more than the optimistic figure quoted by the council. In his response, I hope that the Minister will consider the fact that, in addition to the wholly negative effect of a bus war, pressure may be put on Plymouth city taxpayers. Far from being an asset sale, this is a Dutch auction.

I could not have put it better myself. To put it simply, CityBus works. It works by providing value for money, excellent access and environmental efficiency in an age that calls for responsibility, public service and sustainability.

In concluding, I want to say to the huge number of people in Plymouth campaigning to expose the folly of selling CityBus, “Keep up the good work. I will do everything I can to back you.” I know that the Minister does not have powers to halt this stupid proposal—I wish he had—but I feel it is important to tell him about something that works in the world of bus public transport, particularly at a time when the Office of Fair Trading is focusing concerns on how things are not working in many other cities and communities. I hope that he will take note of this important example of how operations in the world of bus transport can and do work, and that he can point us in the direction of how we can hold the Tory council in Plymouth to account over its appalling stewardship of this green jewel in our city’s crown.

I would like to think that the Tory council’s negligent handling of this issue and taxpayers’ money could open it up to being surcharged. I guess it is too much to hope that the Minister will be able to point me in the direction of such powers, but I hope that he will draw the appalling record of the Tory cabinet in Plymouth to the attention of his colleagues in the Department for Communities and Local Government, so that it is fully taken into account in the assessment of the council’s hopeless and hapless performance on this issue.

I congratulate my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) on securing the debate and thank her for bringing these matters to the attention of hon. Members. She may be aware that I have strong empathy with her view in that Ipswich Buses, along with Plymouth CityBus, are two of only nine remaining municipal bus companies. I am well aware of the depth of feeling that the proposed sale of Plymouth CityBus is causing in her constituency. I congratulate my hon. Friend on the part she has played in raising the profile of the issue.

Of course, we all know how important a strong local bus service is to communities everywhere in the country, urban and rural areas alike, and that people have entirely justifiable concerns when their local service appears to come under threat. Central and local government provide more than £2.5 billion in support and grants to the bus industry every year, which is three times the level of support provided a decade ago. Support for local transport will remain a priority for the Government.

A reliable bus network that offers good value for money is vital to further reducing urban congestion, improving air quality in our cities and lowering carbon emissions from transport by providing a real and credible alternative to the car for many short journeys. The bus is also key to improving access to employment and other services for a great many people, especially, but by no means exclusively, those without a car.

The bus provides a connection with a community—particularly for the more vulnerable people in society—which is why, in addition to providing free off-peak bus travel across the whole of England to all older and disabled people since April last year, we are continuing to look at how concessionary fare reimbursement is paid, so we can ensure that it is administered in the fairest and most cost-effective way. Precisely because local buses are so important to the communities they serve, it is Government policy to ensure that local authorities are empowered to make decisions on the best way to manage their local bus service. That is why the Local Transport Act 2008 gave local authorities the powers they need to build stronger working relationships with bus operators so they can create binding arrangements that provide better and more sustainable bus services, with better facilities and a higher standard of service for passengers.

The 2008 Act introduced new powers to allow local transport authorities to sign voluntary partnership agreements with multiple operators for the first time, or to encourage further the use of binding quality partnership schemes, which compel operators to provide services to a minimum standard in exchange for local authorities improving facilities for passengers and vehicles. Indeed, the Act makes quality contracts schemes a realistic proposition for the first time, under which a local transport authority can introduce a London-style franchise system and take full control over the way buses are operated in their authority area.

The point I am making at this stage of my speech is that we have provided the powers across the piece for local authorities properly to hold bus companies to account. However, the situation would obviously be different in a case where the local authority has ownership, which is something I will come to in a moment.

We are already seeing many examples of close partnership working across the country, which is reaping real benefits for passengers. We continue to work hard to promote those new powers, providing guidance and advice to local authorities and encouraging them to make full use of the powers contained in the Act. Of course, we meet regularly with our colleagues in local government and with representatives from the bus industry, and it is clear that there is no one-size-fits-all solution.

Bus operators operate routes where people use them the most, and the economic sense of that is clear. In addition, local authorities can, and do, subsidise routes that provide a further social benefit—indeed, 500 million vehicle km run on that basis every year.

There are many important services and only a finite amount of money, but the message is the same: decisions on local bus services are best made by those locally elected to take them. Councils are elected to work in the best interests of the communities that elect them. While it is for central Government to provide the legislative framework that gives councils the tools to do their job, Westminster cannot, and should not, seek to control their actions. The same is true for the assets owned by local authorities.

Sitting suspended for a Division in the House.

On resuming—

I was saying that councils are elected to work in the best interests of the community that has elected them, and that we in Westminster should not seek to control their actions. I was about to say that the same is true for the assets owned by the local authority. In many ways, this addresses the point raised by the hon. Member for Rochford and Southend, East (James Duddridge), who is no longer in his place. At the end of the day, it is for locally elected councils to use their assets in a way that provides the best benefits to the people who elected them. Plymouth city council is ultimately accountable at the ballot box to the people of Plymouth for its actions, not to us in Westminster.

On the question of assets, if the Office of Fair Trading decides to call in and look at the impact of sell-offs and bus wars, would the Minister think it appropriate for the sale to be halted while the investigation is undertaken?

People would have to look at the competition implications of a change in circumstances on a case-by-case basis. As my hon. Friend knows—I shall deal with this briefly—there is the question of the OFT review.

In all our work with the bus industry and local authorities, two clear messages come across: local buses are best managed at a local level, and transport works best when operators and local authorities work together. Our consistent improvements to the regulatory framework contribute to those goals.

Of course, there is a case for competition where it has a role to play. Hon. Members may be aware that the OFT recently published a report that encouraged more competition in the bus industry. I commend it on the depth in which it has examined this issue so far. The Department for Transport will continue to work with the OFT to decide the best course for the bus industry. We can see that even though car ownership has risen, people are still choosing to travel by bus.

So where do we go from here? The bus is absolutely key to achieving every part of the Government’s transport strategy. We want to demonstrate that measures designed to support and encourage sustainable travel, including walking, cycling and public transport use, which together we have termed “smarter choices”, can help to ease congestion, increase physical activity and reduce environmental impacts from transport.

Local authorities are beginning to consider their next local transport plans, and we expect to see smarter choices as a key component, as is already the case for many authorities. By implementing measures on smarter choices, including encouraging the greater use of buses, local authorities, businesses and local communities will be able to harness the benefits in their areas.

I have said that the bus is a key weapon in meeting this country’s obligations on carbon reduction, and that is true, but the bus is of paramount importance to many people for any number of other reasons. Nearly one fifth of all commuting trips are now made by public transport, and I fully expect to see that figure rise even further through the support of smarter choices. With the introduction of free off-peak local bus travel anywhere in England, older people now have more freedom to travel in retirement than ever before. People feel safer and more comfortable when travelling than in the past, and those factors are reflected in rising patronage, which reverses a trend that had been drifting downwards since the 1950s.

Such changes do not happen suddenly, but take place over time, as people adapt their behaviour to a modern world in which we need to be more conscious of our carbon footprint, and in which we cannot rely on building new roads to cope with increased demand for transport. Behaviour change is absolutely integral to our strategy, which the evidence shows is working. I genuinely believe that we have the right regulatory arrangements between central Government, local government and the private sector in respect of the bus industry, and we will continue to work to build on the improvements that we have made and to construct a stronger, more robust network for the future.

I promise my hon. Friend the Member for Plymouth, Sutton that I will raise her concerns with my ministerial colleagues in the Department for Communities and Local Government. If she believes that Plymouth city council has done anything inappropriate, there is obviously a role for the district auditor to look at the use of resources. However, as I have said, at the end of the day, it is for the people of Plymouth to make a judgment on decisions taken by the city council.

I understand that CityBus provides the people of Plymouth with good access to bus services and that it is a popular service, especially with older people and because of its school-run capacity. I have spoken a great deal about the influencing role that councils can have.

To follow through on the point made by my hon. Friend the Member for Plymouth, Devonport (Alison Seabeck) as to whether there should be a suspension if there is a reference to the OFT, would the Minister agree that, with a bus company that is as successful as Plymouth CityBus, there would be a good reason to consider putting the whole thing in suspension pending the OFT’s consideration?

I come back to my central point, which is that the framework that we have established puts the primary responsibility for making such decisions on the local authority. It will have to do that in the context of that knowledge, and I am sure that my hon. Friend will ensure that everyone in Plymouth knows that the city council knows that those are the circumstances.

I want to be clear about what the Minister is saying. He is not saying that his Government are telling Plymouth city council not to sell CityBus. Is that correct?

I made it clear that the framework in which we see councils having a relationship with bus companies is one for the local authority. However, having said that, I have entirely described the set of relationships between local government and bus companies, and how those can be improved by many of the frameworks that we have put in place in legislation over the past few years. Any local authority that owns a bus company should cherish the opportunity that it has and make the most of owning a bus company, because it may find that the power to influence may not always be as great as it has been through direct ownership of the bus company.

Sitting suspended.