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30 Years Of Tory Bus Privatisation And There's No Reason To Celebrate

26/10/2016 08:15
Hulton Archive via Getty Images

It's 30 years to the day that our buses were deregulated by the Conservatives. An anniversary it may be - but no cause for celebration. The privatisation experiment has failed and, remarkably, even the Tories are now quietly having to acknowledge that when a key public service is left to the market it just doesn't work for people. The failed record of deregulation is undeniable: fares have risen faster than inflation while bus usage has fallen by more than a third, helping create Britain's congestion crisis.

It is fitting on this 30 year anniversary that Labour colleagues in the House of Lords won an important vote on the Bus Services Bill on Monday, condemning Theresa May to her fourth parliamentary defeat since taking office. Labour's amendment removed Clause 21 of the Bill which would have prohibited local authorities from setting up new bus companies. Labour believes that if the Government is genuinely interested in allowing local authorities to deliver the best possible service for passengers then municipalisation must remain an option

The 1985 Transport Act came into effect on October 26 1986, deregulating the bus industry in England outside London. Our publicly owned National Bus Company was sold off to the private sector and road licensing schemes were abolished. The Conservatives said that deregulating the bus industry would deliver more market entrants and greater competition. In their 1984 buses White Paper they argued there "has been too little incentive to develop markets, to woo the customer" and that without "the dead hand of restrictive regulation" fares could be reduced, new and better services would be provided and more people would travel. That White Paper also said "if the customer has the final say, bus operators will look keenly to see where and when people want to travel. If one operator fails to provide a service that is wanted, another will." But that isn't what happened.

The market is now dominated by five big bus operators, the country carved into chunks and divvied up between them. Far from increasing choice for consumers, smaller bus companies have been unable to compete, and huge swathes of the country are effectively run as private monopolies. In fact by 1997, the three largest private companies - Arriva, FirstGroup and Stagecoach - controlled just over half of the bus market by turnover. Indeed, a few years ago the Competition Commission found that "head-to-head competition is uncommon" and instead reported high levels of what it called "geographic market segregation", referring to the tendency for operators to stick to their own territories rather than challenging rivals in other areas. That means if passengers are angry that fares are shooting up, or buses are always late, or standards are poor - too bad, there's no other option. The way our bus market currently works, they've got to like it or lump it.

And what of the Conservatives' other promises? They said fares could be reduced, but the reality is that bus fares in England outside London rose by over 156% between 1995 and 2016. The retail price index rose by 77% over the same period - so bus fares have risen in real terms. They also said more people would travel. Yet bus patronage in England outside London is now over a third lower than it was on the eve of deregulation in 1986. Just within that first year of deregulation, patronage outside London dropped by over 7%. The falling number of bus passenger numbers since deregulation is particularly pronounced in the north. Both the North East and the Yorkshire and Humber regions have seen bus patronage slashed by over half since 1985.

So the promise of the market has failed; and what makes it even worse is that huge amounts of public money go into the bus system, yet the public have no control. Buses are still heavily funded by the public purse. Total public financial support for buses accounted for 41% of overall industry funding in 2014/15 - including funding for the reimbursement of bus operators for trips made by concessionary pass holders as well as the bus service operators grant, a fuel duty rebate paid directly to operators. Despite this level of public funding, bus companies are under absolutely no obligation to treat their operations as a public service, they are not subject to the Freedom of Information Act, and local authorities have little say over their running. Bus operators don't have to consult before making changes to a timetable or route; and the criteria for registration includes no reference to public demand or to existing services. So bus operators are able to drop a route they deem unprofitable at the drop of a hat, leaving stretched local authorities to pick up the pieces. It has led to the absurdity of many pensioners having a bus pass - but, effectively, no bus on which to use it.

While local authorities, suffering heavy budget cuts handed down by central Government, are struggling to plug the gaps in service with supported, tendered buses, private operators are boasting profits. In 2014/15 Stagecoach had a 13.5% operating profit margin on its regional bus routes, and Go-Ahead had a 13% operating profit margin. Public money is leaking out of the sector through dividends to shareholders, rather than being reinvested into the service and passed onto the passenger through better standards and lower fares. Before deregulation, in 1985, three-quarters of bus turnover was in the hands of the public sector - by 1997 that had diminished to around 7%. Portsmouth City Council was the first municipal bus company to sell its bus operation in June 1988. There are now just 12 municipal bus companies still running across Britain, but they boast some of the best passenger satisfaction ratings in the country.

The story is different in London. After a long and hard-fought battle, the Government announced in 1993 that it would defer the previously intended deregulation of buses in London, and the capital has thus avoided the fate of the rest of England. While between 1985 and 2016 bus passenger journey levels in English metropolitan areas dropped by over 50%, over the same period in London bus passenger journeys increased by 99%.

Having fought for years to give local communities power over their bus services, Labour will continue working to improve the way buses are run in our country. This year the Conservatives introduced the Bus Services Bill, having finally seen that their policy of deregulation isn't working - but unfortunately their draft legislation doesn't go far enough to remedy the situation. Providing powers to areas that have signed devolution deals to re-regulate their bus services is a start, but Labour wants those powers to be extended everywhere. My colleagues in the House of Lords recently won a vote to do just that, and we will be fighting tooth and nail to defend their achievement.

For the past 30 years, bus companies have been able to put profit above passengers. We won't waste this chance to change the way buses are run in our country. Unlike buses, two opportunities to do that won't come along at once.

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