House of Commons Transport Committee

Pdf File 2,773.63KByte

House of Commons Transport Committee

Competition in the local bus market

Third Report of Session 2012?13

Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/transcom

Ordered by the House of Commons to be printed 4 September 2012

HC 10 (Incorporating HC 1861-i to iii, Session 2010-12)

Published on 13 September 2012 by authority of the House of Commons London: The Stationery Office Limited

?20.00

The Transport Committee

The Transport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Transport and its Associate Public Bodies.

Current membership

Mrs Louise Ellman (Labour/Co-operative, Liverpool Riverside) (Chair) Steve Baker (Conservative, Wycombe) Jim Dobbin (Labour/Co-operative, Heywood and Middleton) Mr Tom Harris (Labour, Glasgow South) Julie Hilling (Labour, Bolton West) Kwasi Kwarteng (Conservative, Spelthorne) Mr John Leech (Liberal Democrat, Manchester Withington) Paul Maynard (Conservative, Blackpool North and Cleveleys) Iain Stewart (Conservative, Milton Keynes South) Graham Stringer (Labour, Blackley and Broughton) Julian Sturdy (Conservative, York Outer)

The following were also members of the committee during the Parliament.

Angie Bray (Conservative, Ealing Central and Acton) Lilian Greenwood (Labour, Nottingham South) Kelvin Hopkins (Labour, Luton North) Gavin Shuker (Labour/Co-operative, Luton South) Angela Smith (Labour, Penistone and Stocksbridge)

Powers

The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk.

Publication

The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at . A list of Reports of the Committee in the present Parliament is at the back of this volume.

The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only.

Committee staff

The current staff of the Committee are Mark Egan (Clerk), Farrah Bhatti (Second Clerk), David G Davies (Senior Committee Specialist), Tony Catinella (Senior Committee Assistant), Adrian Hitchins (Committee Assistant), Stewart McIlvenna (Committee Support Assistant) and Hannah Pearce (Media Officer).

Contacts

All correspondence should be addressed to the Clerk of the Transport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6263; the Committee's email address is transcom@parliament.uk

1

Contents

Report

Page

Summary

3

1 Introduction

5

The importance of bus services

5

Provision of bus services

5

London

6

Passenger numbers

6

Passenger satisfaction

7

Government bus strategy

8

Government spending on buses

9

Reference by the Office of Fair Trading

10

Our inquiry process

11

2 Competition?is more always better?

12

Competition Commission report?key findings

12

Geographic market segregation

12

Lack of head-to-head competition

13

Excess profits

13

Proposed remedies

14

Reactions from stakeholders

15

Passengers

15

Local authorities

16

Bus operators

16

Detriment

17

Trades Unions

18

Government response

18

Conclusions

19

3 The franchise option

20

Competition Commission's analysis of the bus franchise option

20

Does London point the way?

21

The franchise option?some pros and cons

22

Quality Contract provisions

24

Difficulties of being first local authority "across the line"

25

4 Partnerships

26

Non-statutory bus partnerships

26

Statutory partnership options

26

Government policy on partnerships and funding reform

27

Competition Commission and quality partnerships

28

Ingredients for successful partnerships

28

Multi-operator tickets

29

Supported services

29

2

5 Monitoring and enforcement of standards

31

Ensuring safety and punctuality

31

Traffic Commissioners

31

A comparison with rail regulation

32

Leadership by the bus industry

33

6 Conclusion

34

Conclusions and recommendations

36

Annex: Bus passenger statistics

39

Formal Minutes

40

Witnesses

41

List of printed written evidence

41

List of additional written evidence

42

List of Reports from the Committee during the current Parliament

44

3

Summary

Over five billion passenger journeys are made by bus each year in Great Britain, journeys that are important to individuals and to businesses. Outside London, three-quarters of bus services are planned and provided commercially by private bus companies. Additionally, local and central government spend over ?2.5 billion in England alone on support for bus services and concessionary travel. While many services are good, not all are as good as they could or should be and bus use outside London continues to decline. Quality varies across areas and across bus operator groups. In our previous report, Bus Services after the Spending Review, we highlighted the danger that bus services would be disproportionately affected by the spending cuts.

The Competition Commission undertook a major investigation into the operation of local bus markets and estimated that a lack of competition was imposing up to ?305 million of detriment on passengers and local authorities. It proposed remedies to increase head-tohead (on the road) competition, which it believes will lead to improved services for passengers. The Government has agreed to implement most of the remedies.

Many witnesses to our inquiry argued that widespread head-to-head competition was neither sustainable nor desirable. There was general support for the individual remedies proposed by the Competition Commission, particularly for more multi-operator ticketing schemes, but a view that these measures alone were not sufficient. We support the Competition Commission's remedies but are not convinced that it has addressed the full range of issues, including the problem of large incumbent operators who do not provide a sufficiently good service.

The Local Government Association (LGA) and some passenger transport executives (PTEs) argued for more emphasis on franchising, using the Quality Contract provisions of the Local Transport Acts. The LGA also argued for more government bus spending to be put under local authority control. Bus operators and some passenger groups were wary of these proposals. We concluded that although only a few PTEs seem likely to adopt the franchise route, it is important that this option is seen to be realistic. The Government should be even-handed in its approach to support for partnerships and franchises. The key issue will be whether franchises can deliver better value for money. London delivers a superior bus service, under a form of franchising, but in very different circumstances and with a much greater level of subsidy. Changes to the Local Transport Act 2008 are not required.

Partnerships?between local authorities and bus operators?will be the way forward in most areas. Where possible, partnerships will include multiple operators, as in Oxford, and competition will take place within a framework that benefits the public. Multi-operator ticketing schemes and smartcards should be implemented more widely. In areas with only one operator, partnerships should still be pursued. We call on local authorities and the bus industry to show leadership in developing partnerships, the best of which are based on shared interests and long-term-relationships and cannot easily be imposed. We also call on the Government to ensure that partnerships, including measures such as joint ticketing and co-ordinated timetabling, can proceed without undue constraint from the competition

Download