Examination of Witnesses (Questions 20-39)|
WEDNESDAY 8 MAY 2002
(Mr Lockhead) No, we are highly regulated now, although
it is referred to as "deregulation". In our submission
we listed the regulatory authorities that we are accountable to
outside of London, so it is not true to say that it is deregulated
and it is not true to say we want more regulation. We want less
rather than more.
21. But you want to try to exclude, do you not,
the low cost of entry to the industry?
(Mr Lockhead) Not at all. In fact, over the last two
or three years, the number of competing companies has increased
and the number of bids per contract is growing. The industry is
very competitive, and that is a good thing.
Chairman: We will come on to some aspects of
that. Mr O'Brien.
22. What happens to the buses that are made
redundant after the 8 years you referred to? Are they sold on?
Are they scrapped? Do you use them in other ways?
(Mr Lockhead) No, that is the average age. A bus will
run up to 15 years old.
23. What happens after that?
(Mr Lockhead) It is usually scrapped. It usually does
not meet the emission standards. It does not meet the quality
standards that we have set ourselves.
24. That applies to all the companies?
(Mr Clayton) We will sell some, but we do in fact
scrap a significant amount.
25. Do you sell them to people in this country,
(Mr Clayton) In the main, yes.
26. In this country?
(Mr Clayton) Yes, but we do scrap a significant number.
(Mr Lockhead) We do not sell any. We scrap them all.
27. What about Stagecoach? You sell them on
(Mr Cochrane) We no longer have operations in Africa.
28. You sold all the buses.
(Mr Cochrane) We sold the operations to the companies
some three years ago to local businessmen. We adopt, really, a
horses for courses approach, depending on what stage and what
condition the vehicle is in.
Chairman: Okay. Ms Jackson.
29. Following on Mr Donohoe's questioningfollowing
that 1985 in Sheffield. After deregulation, we saw fares shoot
up, passenger numbers go down, and the quality of public transport
generally almost disappear. Congestion went up as well. To what
extent do you see the popularity of buses, which definitely took
that significant dip, coming back, and how can you work better
together to ensure that it does come back?
(Mr Cochrane) Certainly we do not have specific bus
operations in the centre of Sheffield.
Helen Jackson: But you have got a beautiful
tram, which could work a lot better with the buses.
Chairman: If you could cut down on the publicity
30. Okay. Not a bad thing at the moment.
(Mr Cochrane) Every piece of research that we do identifies
that punctuality and reliability are the key measures that encourage
bus use. In fact, I see a press release issued this morning by
the Commission for Integrated Transport indicating that of a public
survey of 1,700 individuals, 26 per cent said they would use buses
more if journey times could be halved. So reducing congestion,
improving punctuality and reliability are the most important issues.
Chairman: We will come to bus lanes in a minute.
31. I think all three companies have stated
that they are in favour of bus quality partnerships. My concern
is how you square this with the withdrawal of services. If I could
just direct one question to First Group: I think it is your service
that has been withdrawn from Weatherby to
York, passing through some very rural villages
which happen to be in the vale of York. You have probably received
a bus subsidy over a considerable period of time to operate this:
can you justify why the partnership has broken down here, and
what lessons we can learn from that in the future?
(Mr Lockhead) I am disappointed to hear that the partnership
has broken down. I did not think it had. In fact, I thought we
had a very successful partnership in York and that we had seen
passenger growth of 10, 11 per cent, which is a good measure of
the success that we have had. We are very reluctant to withdraw
any services because it means that we are moving away from a market
that we want to stay in.
32. What sort of figure are we talking about
overall? Do you have a figure for the proportion of commercial
(Mr Lockhead) 84 per cent of our services are commercial,
throughout the country.
33. How many bus kilometres were withdrawn last
(Mr Lockhead) I am told it is less than 1 per cent
of the total. It is minimal compared with the amount of mileage
we run. We will give you figures on that.
34. You will give us that, and you can tell
us whether you think that trend is going to continue?
(Mr Lockhead) I think what we can say is that our
focus is to ensure that we achieve growth and that we give the
maximum network coverage that we can. There are occasions, however,
when, from simply value for money and the number of people using
the services, we can no longer maintain those services. We cross-subsidise
many routes across our networks from both day of the week, time
of the day and so on. But there comes a point, when, if there
is just not enough people using it, then the option is that we
would withdraw, and we would recommend that the Council would
withdraw, as a partnership arrangement. If, in the event, the
Council feel that they must provide that service, then they go
out to tender, and we compete with other companies in that area
to win that bid. So the Council can be sure that they get the
lowest cost for providing that service, but on many occasions,
we do not believe that it gives good value.
35. I think, to be fair, it is the hope that
that particular service will continue. Following on the Chairman's
question, what proportion of services do you think will be suitablethat
question is to the three companies - for introducing bus quality
partnerships, and can you give a split between urban and rural
(Mr Lockhead) I think every route we have should be
part of a partnership. Every part of the network should be part
of a partnership. The partnership gives us free movement of our
buses on the very limited road space some of the communities we
serve have. What we want to see is a focus on delivering punctuality
and reliability that will allow people to give up their cars and
move on to bus travel. We know it works. In many, many areas like
York, Leeds, Manchester, throughout the country where we have
provided this focus on quality, reliability, bus lanes and so
on, we get growth.
(Mr Cochrane) What I can see is that Stagecoach currently
has 50 quality partnerships around the country, and we are currently
in negotiations for a further 30. You raise a very valid point.
There is perhaps a perception that quality partnerships are only
suitable for urban networks. They are also suitable for small
and medium sized towns across the City. For example, in Perth,
Scotland, we have a very good partnership relationship with our
local authority; similarly in Cambridge and Oxford. So they apply
across a wide range of town size and network operations.
36. So would the Committee conclude that it
is more appropriate to urban areas than rural areas?
(Mr Cochrane) No, I do not think the Committee could
conclude that. It is horses for courses. The partnership form
may take a different nature, but that is the beauty of the flexible
structure that we have.
37. Returning to the question of new buses,
are you, each company, prepared to put new buses on every route
as part of the partnership? Can we draw a conclusion that perhaps
Cheshire only gets secondhand buses and Yorkshire gets new buses?
One hates to draw that conclusion, but would that be appropriate?
(Mr Clayton) There is a dilemma in that you have vehicles
that are due to last 14 years and their average age at the moment
is 8. If you have assets that still have life left in them they
have to be used, and so I think the issue is about ensuring that
the new vehicles are placed in areas where they represent the
best value, both to us and to the customer.
38. Could I ask you first of all about viability
of services - you talked about commercial and non commercial and
so forth - if you look across the whole range of your operations,
what proportion of the services you operate are entirely free
from subsidy, whether it be from other services or from Council
finance, and are totally commercial in their own right?
(Mr Lockhead) Maybe I could just take you through
what is called subsidy. First of all, the main element of support
that is given to us is directly to concession fareholders. The
vast majority of what is called "subsidy" goes directly
through our companies to selected groups, and they either get
a discounted fare, or whatever, but it is measured, it is transparent:
they count the number of tickets we issue, and then they discount
the number of tickets we issue because they have arrived at what
they call the "generation factor", so they believe that
there is more journeys because of the discount, so the company
is no better off. In terms of the other area of subsidy which
is "secured services", routes that you have asked us
about that we might feel are not viable or not giving good value,
then again, it is not a subsidy in that we simply get a handoutin
the old days we used to get block grants, the difference between
cost and revenue in Europe, that is the traditional way of giving
out subsidy. What we have to do is bid. It is transparent: you
can see what you are buying, you can see what the frequency is,
and you can also see how many people use the service after you
have put the service back in. So again, I do not consider that
a subsidy. It is a mechanism by which a Council or a local authority
can buy back or can buy additional services. The third element
is fuel tax, relief on fuel tax. Our passengers get 80 per cent
relief, they have to pay 20 per cent of fuel duty. Airline passengers
do not pay any duty and neither do railway passengers. What we
say is that because the tax regime is pretty high on fuel here,
and in the pastit is a mechanism by which fares are held
down. It is audited, it is measured, the amount of milesso
again, it is transparent.
39. I do not think Mr Grayling was asking you
whether it was a fair or an unfair subsidy, he was simply asking
you which subsidy you got.
(Mr Lockhead) I say, on those three elements, which
are the only elements, we do not get any subsidy.