Lords debate on Bus Services Bill raises several valid arguments

The Bus Services Bill in England continues to dominate industry interests at Westminster. Our expert analyses the latest developments

I have now had the opportunity to read the transcript of the first day’s debate of the Lords Committee stage of the Bus Services (No 2) Bill (28 January).

I was quite impressed by the quality of the debate, which struck me as far more informed and rational than we often hear in the Commons.

A few things struck me.

First, and perhaps oddly, I found myself agreeing with a number of the comments made by Conservative opposition peers, principally Lord Moylan, in moving their various amendments, while also finding myself sympathetic to the points made by the Minister of State, Lord Hendy, in explaining why the amendments weren’t necessary.

Those who favour abolishing the House of Lords might take note of the high standard of well-informed debate here.

I was pleased to see the minister point out that transport authorities have sources of funding other than direct grants from central government, not least council tax

Secondly, a key issue raised was the thorny issue of funding.

Various peers pointed out that, in the absence of adequate long-term funding, it is difficult to see many transport authorities proceeding down the franchising route – although perhaps I would not go quite as far as Lord Moylan in saying that, in the absence of adequate funding, the Bill “is an absolute dud”.

Council tax solution proposed during Bus Services Bill debate

However, I was pleased to see the minister point out that transport authorities have sources of funding other than direct grants from central government, not least council tax.

I have argued repeatedly that, if transport authorities want to see increased bus patronage and a growing bus market, they have the option to increase council tax to do so rather than rely on the national taxpayer.

Indeed, why should the national taxpayer cover the entire cost of what is ultimately a local transport service?

The funding burden should, arguably, be shared more equitably between national and local taxpayers than it is today.

I was also taken by Lord Moylan’s amendment that, if a transport authority undertakes an assessment of introducing a franchise but decides not to proceed, it should not be able to carry out a further assessment for five years in order to give the private sector operators greater certainty over the landscape in which they operate.

Given the state of the public finances, the chance of seeing any material increase in bus funding is slim

It sounds like a fair point doesn’t it? But Lord Hendy’s response that circumstances might change, potentially materially, within five years and possibly quite quickly, thereby justifying a further assessment of the case for franchising, seemed to be equally valid. On the one hand, and on the other!

The one set of amendments with which I had difficulty was that tabled by Lord Woodley.

He proposed that authorities that set up municipal bus companies should also be able to introduce franchising and give direct awards to their own municipal company to run the franchise, without any competition.

Given his trade union background, these amendments were perhaps not surprising. They reflect a political ideology – to which he is perfectly entitled – of “public sector good, private sector bad” which, in this day and age, almost everybody accepts is not the case.

If it ain’t broke…

This takes me to a point made by the former Secretary of State for Transport, Lord Grayling.

He questioned why anybody would seriously consider that bringing rail operator Chiltern Railways back into the public sector would lead to a “quantum better service for passengers”.

Performance has not always been perfect, by any means, but it has been pretty good overall, and the operator has invested heavily in the route – something that would not have happened in the public sector.

His point was effectively this: “Why adopt a franchise solution for buses if your operators are providing a good service?”

It’s a fair question and, of course, this Bill does not require authorities to adopt a franchise solution.

However, it highlights a key question: Why does the government want to bring all rail passenger services under public control, but is happy to see bus services run by private operators, even under a franchise regime?

It’s an obvious question but, to my knowledge, nobody has yet asked it. When somebody does, I will be interested in the answer.

There are two more committee stage days for this in the Lords. I hope that the quality of the debate is as good as it was in the first committee day.

However, as everybody seems to be increasingly recognising, in the absence of adequate funding, none of this matters – simply because authorities will not have the resources to go down the franchise route, with the combined authorities the only probable exception.

Further, given the state of the public finances, the chance of seeing any material increase in bus funding is slim.

‘Growth’ contradiction

This takes me nicely to the Chancellor’s recent “growth” speech. In context, it was one of the strangest speeches from a Chancellor that I have heard, not because I disagreed with it, but because it so contradicted everything she had done in the first seven months of this government.

If you believe so strongly in growth, why deliver a Budget in November 2024 that, by universal consensus, has had exactly the opposite effect?

The government said it was fixing the foundations, but it has taken decisions which seem to have damaged them even further, resulting in what looks like a material philosophical U-turn.

The stark contrast between her Budget and this speech made me wonder if blind panic has set in both in the Treasury and in No 10 over the state of the economy and the country’s finances.

And here is another worrying thing. As we all know, the Chancellor’s recipe for growth, including supporting Heathrow runway three, will not happen for a decade at least – if at all, given all the legal challenges that could yet derail plans.

We seem to have a Chancellor who is talking about growth in five, ten, twenty years’ time when we need growth today. I’m struggling to make sense of this approach.