Official Report 246KB pdf
I open today's meeting of the Local Government and Transport Committee. This is the first time that a Scottish parliamentary committee meeting has been conducted in Stranraer. It is good to be here and I hope that the meeting will be constructive. I will explain why we are down here.
Thank you. I will make a few introductory remarks. I am Joan Mitchell and I am the chair of the planning and environment committee of Dumfries and Galloway Council. I would first like to welcome the committee to Dumfries and Galloway. We appreciate the opportunity to talk to MSPs about public transport issues in what is a very rural area. I welcome you particularly to Wigtownshire and Stranraer. My own ward is in Wigtownshire. We appreciate your coming to the most rural part of what is one of the most rural authorities in Scotland. Undoubtedly, the nature of the area gives us a particular view of public transport issues.
Thank you. Michael McMahon will begin the questioning.
On contracts, you state in your written submission:
As the transportation manager, I will take the global view. My colleague Douglas Kirkpatrick works with the fine detail, so if I miss some of the fine points perhaps he will come in and keep me right.
I agree. When we tender, our specifications include vehicle age, vehicle quality and other factors, then all the options are put to our committee. The least-cost option is always in there to show the basic option, and if we can afford anything on top of that we will put it into the network.
But do you set a target for accessibility? Have you set a challenging figure that you say you must deliver, regardless of cost, because you know that being able to get on and off a bus with a pram or as an elderly person can be much more important in rural communities than it is in urban areas? Do you build in criteria and ensure that a certain level is delivered?
We have not done that yet. In the coming months, the council will consider how the Disability Discrimination Act 1995 impinges on all the services that it provides. We will probably develop standards and, given the possible cost increases, put them to the planning and environment committee to see how it views the matter. We have been working with operators to try to ensure that, where needed, the vehicles that we provide are hybrid ones, with wide doors and fairly easy step entry. Most of the time, we have to work with the existing vehicles in the fleets because, as you have heard, we cannot afford new vehicles. However, we have been trying to encourage operators to provide better vehicles with easier access. We have made enhanced funding available to operators to run such vehicles on all-day services. I hope that most of the old buses with narrow entrances and very high steps have been eradicated from services in Dumfries and Galloway.
But no target has been set on accessibility.
Not yet but, as I said, we will consider the issue as part of our work on the implications of the Disability Discrimination Act 1995, and when we draft our next local transport strategy.
Aside from bus schemes, what other transport schemes does the council provide for people who have significant mobility problems? Perhaps you have a taxi scheme.
We have a taxi card scheme in the region, which provides residents who are unable to use conventional public transport with reduced taxi fares—they pay 60 per cent of the fare and the council pays 40 per cent. Through our legal services department, we are also trying to increase the accessibility of taxis in the region.
What percentage of taxis are accessible at present?
It is difficult to judge that and we do not have any figures. Our legal services department deals with the licensing of taxis and we run the taxi card scheme.
The figure is fairly low. Again, we rely on commercial operators providing the facilities; the council simply subsidises the cost of journeys.
Some local authorities put conditions on the accessibility of new vehicles when they issue licences. Has Dumfries and Galloway Council considered that approach?
Again, we will consider that as part of our consideration of the implications of the Disability Discrimination Act 1995. The council now has a full-time accessibility officer and we are starting dialogue about how to develop the services.
Paragraph 3.6 of your submission lists the services for which low-floor, accessible vehicles have been introduced. What made you pick those particular services? I can understand why you picked the Dumfries town network—it is probably one of the busiest services—but I am not sure why you chose the other three from all the services in the region.
The feedback that we have received from our customers through our bus user group meetings and in regular correspondence has highlighted the desire to have low-floor buses on some services in preference to others. Top of the list was the Dumfries to Edinburgh service. We were grateful for the offer of funding for bus improvements from the Executive through the west of Scotland transport partnership and we recommended that much of the money should go to the service 100 to realise that desire.
Is all the funding that is needed for that coming from the Scottish Executive?
We are negotiating with all our bus operators and have found that they have differing thresholds. For example, some are prepared to put up half of the cost of a new bus and require funding only for the other half. Fairly detailed negotiations are going on. We are trying to make it economically viable for the bus operators to enter into finance agreements to purchase new buses and are trying to determine how much money they need, over and above what they get from the council or, through the fare box, from the public.
In your written submission, you state:
We have found that the amount of administration that would be involved in getting a quality contract up and running in the region would be excessive. We do not have the staff or resources that would enable us to do the detailed consultation that would be required. We would likely need to get consultants involved to do all of the background work. I believe that we can deliver quality services through our existing contracts if we get the revenue and capital funding that is necessary to improve them.
Are you saying that you do not see a role for the quality contract even if the process could be amended because what it can deliver can be delivered by different means?
There is a role for the quality contract, and the Transport (Scotland) Act 2001 contains a good set of rules that can be used to bring quality to the bus industry. However, at the moment, we do not have the resources to enable us to have such a contract. If the consultation process were slightly easier, it might be possible for us to make progress in that regard.
As we tried to say in our submission, the circumstances in this region are quite different from those elsewhere, given that we are regulating the industry through the awarding of contracts for the bulk of the services. There is probably a place for formal quality arrangements in areas such as central Scotland, where competing operators are driving quality down and there is a need to bring quality back into public transport. We are working as best we can with the budgets that we have available. Every time that we retender, we try to increase the quality within the constraints of the budgets that are available. In the past couple of years, we have been fortunate, in that the additional money awarded by the Executive has enabled us to increase the quality of the vehicles. However, I do not think that the council could afford to enter into formal quality agreements with bus operators, given the additional costs that would be involved. There is not enough funding in the kitty for that.
Part of this investigation is to consider the limited number of quality contracts that have emerged since the 2001 act. My recollection is that the point about rural authorities not being able to use the set of tools that the contracts provide was not raised when the bill was being considered in Parliament. I would be concerned if there was evidence that they cannot, because clearly a number of authorities are not dissimilar to Dumfries and Galloway Council. If the tools cannot be used by rural authorities, is not there an argument for making them usable?
We have to be careful that we are providing the level and quality of service to meet the needs of a particular area. In many parts of Dumfries and Galloway—the deeply rural parts in particular—it is more important to people that they have a basic bus service that perhaps starts at half past 6 in the morning, so that people can access job opportunities and so on. We are struggling to fund even that basic level of provision.
An issue that has been raised locally is the availability of contractors who want to provide public bus services. Is that a difficulty for the council and how do you see that going over the coming years?
We are trying to be open and honest with all our operators and we are trying to give them as much assistance as we can. We do not want to end up with a dearth of operators and monopoly situations. If we can spread the awarding of contracts fairly among all our operators and give them incentives such as funding to allow them to get better-quality vehicles through moneys from WESTRANS we can keep a fairly healthy stock of local operators. Because we have such close contact with the operators, we have a fairly good idea of all their problems and we try to give them every assistance that we can. Recently, to address the shortage of bus drivers, we tried to get funding from the local enterprise company to train people to become bus drivers. Wherever there is a problem and we can help, we will do our utmost to ensure that we have a healthy local bus industry.
I understand what you say about not wanting to get into a monopolistic situation, about trying to encourage competition and about the number of operators on a given route. Where you have a number of operators on a given route, particularly where one of them is a contracted operator and there are commercial operators running the same route, what degree of co-operation can you encourage? What powers do you have to ensure ticket acceptance and equality of fares among operators on the same route?
There are very few instances in which there are commercial and tendered operators on the same route, but one example is in Stewartry. We retendered the Stewartry area network last year, but Stagecoach still has a small commercial operation there. Stagecoach accepts all return tickets issued by the other operators in that area. We talk to the operators and get agreement that they will accept one another's returns. Subsidised operators will accept Stagecoach returns and Stagecoach will accept subsidised operators' returns as well.
Earlier, we mentioned the Edinburgh route in a different context. Does the same arrangement apply to the Edinburgh route?
On the Dumfries to Moffat route, the operators also accept one another's tickets.
But not beyond Moffat?
That is out of our region and out of our control. Mr MacEwan is giving evidence later and he might be able to give you more information.
The question that I was going to ask has already been answered, but I have another question about subsidies. I was interested to learn from Councillor Mitchell's opening statement that 99 per cent of the services are subsidised. Should we expect the Scottish Executive to fund operators to that level? I appreciate the complexities of the transport industry, but there are many other businesses and industries that do not receive a 99 per cent subsidy. Is there an argument for reducing the subsidy and allowing the operators to take much more of a hit?
I will ask Colin Douglas to respond on the legal and statutory situation. However, as a local councillor, I have to say that the provision of a decent public transport service is an important function of a rural authority. There are also cultural difficulties to get over to encourage rural people to use bus services. There is certainly now wide usage of bus services by elderly people, for whom having a free or very cheap service is a tradition. For the younger generation, there is perhaps a perception that the car is the one and only method of transport. That is why it is important to encourage younger people to use buses. Whithorn is a poor rural community in Wigtownshire, 18 miles from the A75, but car ownership there is by no means universal. It is vital that we have provision of transport services to give people work opportunities and other opportunities that we take for granted.
It is important to recognise that, but should we continue to accept the subsidy culture in the transport industry or should we expect the operators to take the good with the bad? There are many industries in rural communities that have to deliver a service in different ways. Is there an argument for reducing the subsidy for transport operators? I appreciate the need for transport services, but should we expect more of the transport industry that delivers those services in rural communities across Scotland? Should we legislate to ensure that they have to take on those services?
You have to look at the root of the present system, which was the deregulation of bus services in the 1980s. Before that we had a system whereby we gave a blanket subsidy to one operator in our part of the world, and the operator cross-subsidised unprofitable routes, either from that blanket subsidy or from the money that it was earning from the profitable routes. If we had a debate on bus deregulation it might last for hours; there were good and bad things about it.
Before I ask my question, will you clarify what you meant when you said that 99 per cent of the service is subsidised?
In the west of Dumfries, only one route within the Stewartry is a commercial operation, run by Stagecoach. We subsidise the other routes through our tendering exercises for local bus services.
What does that mean in terms of the money that the council puts in?
Overall, we invest some £2.8 million in bus services throughout the region—obviously, only a chunk of that goes to the west. Dumfries and Galloway College provides us with £300,000 to provide college services and we receive £500,000 from the rural transport fund. The remainder comes from our council budget, which we receive through the concessionary travel scheme or through our grant-aided expenditure for local bus services.
Your submission highlights your concessionary fares scheme, on which you have had a good track record for some time, given that you have had a scheme in operation since 1991. If I understand you, your concessionary travel scheme provides free travel 24 hours a day, seven days a week. That is to be applauded. We know that some local authorities have experienced difficulties with concessionary fares for the elderly. What difficulties have you had in operating this good scheme? Will you also comment on the financial support that you receive from the Scottish Executive?
The funding that we receive from the Executive for concessionary fares is more than adequate for Dumfries and Galloway. We have run a free scheme since 1991. Well, virtually free; at one point it was free and 10p and passengers had the option of one or the other. The GAE that we receive for concessionary travel is sufficient for the Dumfries and Galloway scheme.
I have a follow-up question. As in my constituency, you have an arrangement for bus journeys to Edinburgh and, I imagine, to other destinations. You mentioned earlier that ticketing could not be used beyond Moffat. Are there any other difficulties with those longer routes?
Our principal area is the region plus a little bit beyond. Journeys to Edinburgh and Glasgow come under a commercial concession. The operator offers the concession. The service to Edinburgh is £2.50 single for a concessionary user, but it is a commercial concession offered by the operator. We pay for journeys within the principal area; outside that area, the operator takes it on board.
You talked about the authority spending £2.8 million on supporting bus services as a whole, then you mentioned £1.2 million that is spent on the concessionary fare scheme. Is that £1.2 million Executive support that is intended for concessionary travel, or is it part of general transport funding that you have decided to spend partly on concessionary travel and partly on general support? What is the breakdown?
The funding that we receive for concessionary travel is about £1.9 million and we spend about £1.2 million of that on concessionary travel. That is based on the returns that we receive from the operators for operating the scheme. We plough the remainder of that funding back into the local bus service network and cross-subsidise that.
I am sorry but I might have picked you up wrong. Did you say that you receive £1.9 million from the Executive for concessionary travel?
I believe so, yes.
Of that, £1.2 million is spent on concessionary travel.
Yes.
So £700,000 from the money for concessionary travel is spent on the general subsidising of bus services. Is that correct?
Yes.
If the Scottish Executive reduced or withdrew that level of funding, what effect would that have in your region?
Approximately 31 per cent of our network is funded in that manner so a withdrawal of that funding would be difficult for the network.
Your submission mentions the importance of subsidising public transport, particularly given the nature of your area. Colin Douglas earlier mentioned that the level of car ownership in the area is quite high. What is the level of car ownership in Dumfries and Galloway?
I cannot quote a figure at the moment. We are currently working with our partners in community transport on a more detailed study of accessibility problems that people have. We have shown that although the level of car ownership in the rural hinterland might be slightly higher than the Scottish average, there are pockets within that where the level of car ownership is extremely low. That is not just in the housing estates in some of the larger towns; it is also in some of the remote villages in Dumfries and Galloway. Between 31 and 35 per cent of people do not have the use of the family car during the day anyway. Unless a bus service is provided for them, they will have severe mobility problems.
I come from an urban rather than a rural area, and the level of car ownership in Glasgow is less than the Scottish average. You appear to have a large elderly population, and that is why I ask for the percentage. It appears that buses are particularly essential for the elderly community in this part of Scotland.
That is correct. It is difficult to tell what the level of need is. Our elderly residents are happy, given the free concessionary travel scheme, as long as there is a reasonable bus service. They have all the time in the world, if you like, to use a bus rather than think about taking out a car, if they own a car. We are trying to ensure that, through provision of a reasonable level of basic public transport services, all our residents can get access to basic services. In Dumfries and Galloway, such services tend to be located in the 12 important towns. If someone happens to live 20 or 25 miles away from one of those towns and they do not have access to a car, a bus service is vital.
Who provided the bus service before bus deregulation? Was it a municipal service or was it provided by a single operator that was 100 per cent subsidised?
Before the mid-1980s, the bulk of the services was provided by the Scottish Bus Group.
Have you compared the level of subsidy in those days with the level of subsidy that you pay now?
It will probably have decreased in recent years because of our greater influence on the management of the situation. I am sure that the subsidy of the Scottish Bus Group just before bus deregulation was £1 million per year. That was in about 1985.
That is interesting, because according to your figures you spend about £4 million per year on general bus support and concessionary travel in the area. That expenditure is to support commercial bus services, but you said that you spent £1 million per year when services were municipalised.
It is difficult to put the matter in those terms. The bus industry went through a huge transition in the 1980s; in some areas there was over-provision, given the number of people who needed to use the services. We were perhaps paying more than we needed to pay at that time. Many unnecessary journeys were operated and services were operated at the wrong frequencies. We had to get heavily involved in bus service provision and we are having to fine-tune services, both to needs and to the available finance. We are providing the optimum level of service that we can provide, which meets the current needs of passengers in Dumfries and Galloway.
We will leave the point for another day. You say that you might have paid too much, but it is worth bearing in mind that you are paying an awful lot now.
We have no problems with a national scheme as such. We have stressed all along, whenever we have been asked, the cross-subsidy that we are forced to make from our concessionary travel budget to our local bus service budget. If a national scheme is set up and the whole GAE allocation for concessionary travel is taken away from Dumfries and Galloway Council, our great fear is that that would leave a severe shortfall for the council to find to pay for its local bus service network. There would be no point in having a national free scheme for the elderly if there was then a severe cutback in the number of services that we could afford to run in Dumfries and Galloway.
My final point is in relation to your interesting local exercise of a subsidised fare scheme to try to encourage more young people to use public transport. Unless things have moved on since you wrote your submission, you do not appear to have feedback on that. You said that 750 extra journeys may have been undertaken because of the scheme. Have you any more details? Do you have any feedback from young people? I was also a wee bit worried about the fact that you have chosen under-16s rather than under-18s for the scheme. Is there any chance of your considering changing that?
I will give you a bit of background on the scheme. We went to primary schools and asked the children a couple of questions, including when the last time was that they were on a bus. None of the primary 7s had been on a bus. That started to worry us slightly, so we then went to the secondary schools in the Wigtownshire area—Douglas Ewart High School and Stranraer Academy—and undertook a large consultation process with all the kids. The main feedback was that they did not use public transport because they thought that the fares were too high.
Sorry, I misread that.
The scheme is for those who are under 18 and in full-time education. The bus companies need something with which they can ensure that the kids are the appropriate age. We use the passes that they have within the schools.
I am sorry, but I have a final point. I do not ask this question as a way of trying to undermine your scheme. I think that it is very important and that it should be supported. However, what are the costs so far of rolling out the scheme?
We have had only about six weeks' worth of returns from the operators, but the costs are in the region of £3,500 to £4,000 for that period.
How many months would that be?
That is for a month and a half.
Before bringing in David Mundell again, I will go back to the issue of the concessionary fares scheme because I want to understand a bit more about its cost. You said that you received about £1.9 million in support from the Executive, of which £1.2 million is paid directly into the scheme, with the other £700,000 being used to subsidise the network. I fully appreciate that you need to subsidise the network to ensure that there is a network for people to use. However, has that £700,000 surplus been used to expand the network or did it substitute for existing funding that the council had already undertaken to provide?
We have tried to work within the budgets that we thought we had available to us when we retendered some of the contracts, and we have tried, in some instances, to lift the service from an absolute basic service and to put a bit of quality into it.
I appreciate that. Has all the £700,000 surplus been devoted to public transport schemes, or has any of it been used in other parts of the council's budgets?
It has all been ploughed back into local bus services.
I am confused. I just want to be clear about the figures that we are talking about here. As a local authority you are spending through GAE £2.8 million on generalised bus services. In addition you receive £1.9 million from central funding for concessionary fares, of which £1.2 million is spent on that and there is £700,000 left. Is that on top of the £2.8 million, or is it included?
It is included.
So the £2.8 million and the £1.2 million, adding up to £4 million is the amount of local expenditure on bus service support.
Yes.
I emphasise how important quality is in encouraging people on to longer route services. There is no doubt about that. One of the most common complaints that I received about the bus service was about the poor quality of the vehicles on the Dumfries to Stranraer route, which is a 75-mile journey. Realistically, if we are going to get people on to public transport we have to provide a comfortable and quick-as-possible ride. Quality is vital in those services.
I have a follow-up and general wrap-up question. Where do you see rural bus services going? How do you see the network emerging? Is it a question of maintaining the status quo or developing the service in a different way? If it is the latter, what is required to do that, if not quality contracts and partnerships? What can be done that is within the control of the Scottish Parliament, other than providing finances?
We have probably spent as much as we need to spend on providing basic conventional local bus services. What we are not managing to do is meet needs in remote areas. We are looking to move away from conventional bus operation and consider things like demand-responsive transport and community transport as a way of plugging some of the gaps. Those are lower-cost options, which have a great role to play in a diverse area such as Dumfries and Galloway.
This is a horribly parochial question; I meant to come in before David Mundell. I wanted to ask about the extra £240,000 that you mentioned you had used to increase the quality of the bus service between Stranraer and Dumfries. I think that you said that that had increased the number of passengers by 50 per cent. Is that right?
The number has doubled.
How many people does that actually amount to? How many people a week use that service?
I have a graph showing those figures; you can look at it later. Prior to the change, the bus was carrying 3,100 passengers every four weeks. That has now gone up to 6,500 passengers every four weeks.
You have talked about innovative schemes such as postbuses. Do councils with responsibility for rural areas get together to share best practice about such innovative ideas?
I am a member of the Association of Transport Co-ordinating Officers, which has regular meetings and various sub-committees. I am chair of the information and ticketing sub-committee, and there are also social services and demand-responsive sub-committees. We get together to share best practice. Best-value reviews are going on throughout the country. I have just responded to one for Stirling. Again, that helps us to share information among authorities. We steal ideas from other authorities and they steal ideas from us.
Good.
Do you run some scheduled services with your own fleet?
We operate under section 46 of the Public Passenger Vehicles Act 1981—sorry to quote acts at you—which allows us to run a local bus service on the back of a school service.
Am I right in thinking that the use of that has recently expanded? I assume that that trend is in the opposite direction to what is happening in the rest of the country.
As Colin Douglas said, we have been expanding into ring-n-ride services and expanding the network as we can. We have trouble getting drivers, as the other operators will tell you later. We sometimes have to hire a driver for 37 hours a week rather than for school time only, so we have to use the buses to the best of our ability.
Does the council pay itself a subsidy for running those services?
No.
It just covers the costs, which are marginal when it comes to running the odd additional journey in between school runs.
What I am trying to get at is whether money comes out of the £2.8 million that we are talking about. Is any of that included in paying for those services?
Yes, obviously, because we have got to find the money somewhere. We find that the rural transport funding from the Executive increases marginally every year, and that allows us to think about running the odd additional one or two journeys using our own buses. Residents have come to us and said, "Please can we get a bus service? We're stuck." We say, "Well, we can't afford to put a tender out and get a Stagecoach bus in to do it, but we can get the council to do it itself for about £3,000 or £4,000 a year."
That was my next question. Those services are not tendered for?
No, but as Douglas Kirkpatrick said, and as I mentioned earlier, there is a huge problem in recruiting bus drivers at the moment. It appears that the only terms that will satisfy people who are currently unemployed are a full-time 37-hour-a-week job, so we are being forced to employ drivers on those terms. If we are paying their wages for 37 hours a week but they are driving a school bus for only 20 hours a week, it makes sense to find something else for them to do in-between times.
I understand the logic that is driving you but, if you expand in that way, you could get to a stage where you are running services that could be put out to tender. How do you draw those lines?
By considering best value. Our best-value report on the council's bus operations showed quite clearly that, in every comparison that we made, the council could provide the service miles cheaper even when exactly the same costs as the private operators face were built in. We have to work to a best-value regime. However, we are not talking about taking away work from people out there. Where the odd extra journey is needed, the council will run a service if it has the capacity to do so.
In reviewing the Transport (Scotland) Act 2001 today, we have emphasised bus services, but I have a brief question on rail services. I know that you have limited opportunities for working with railways, but are concessions available for elderly or disabled people in the areas where rail services operate?
The only rail concession that is currently available is the senior citizen rail card, which I think costs about £10.
Does the council have no contract with ScotRail for any other concession?
No. I do not think that we have been permitted to think about subsidising such services. If the council had surplus moneys available for transport, it could consider the possibility of paying that £10 a year for the old folk, but so far that idea has never got to the top of the heap—it has never become a budget priority.
I am sorry for returning to this point, but did your best-value review of the services that you provide cover the whole of the local authority area or was it limited? If it covered the whole area, are you saying that the local authority could provide bus services more cheaply than the commercial operators?
We are saying that if we consider only the marginal costs associated with using the council's existing resources to run a few additional journeys, it is cheaper for the council to run those services. However, if we were to undertake the operation of all bus services in Dumfries and Galloway, the overheads would rise substantially. Our exercise did not look at that.
So you do not know whether it would be cheaper for the council to run the whole operation.
No. That is not council policy as such. Council policy is to support all its local bus operators, but we try to be imaginative in responding to communities who are stuck for a bus service. We might be asked, "Can you provide a journey at 10 o'clock into Castle Douglas and a journey back at 12 o'clock?" We have no sizeable amounts of money left in our budget, but we might be able to provide the service by squeezing the odd £2,000 or £3,000 and by using one of our own buses.
It is important to compare like with like. We are talking about achieving best-value use of an existing capital resource—the vehicle that is already there—by providing extra hours of work for the bus driver. For example, when the bus was not needed for the school run, we could provide a service to an elderly day centre in my area that would bring folk in from rural areas. That seems like a good idea.
My question follows on from that point. Since you began to maximise the use of your own resources—as you rightly put it—have you had to expand the fleet to cope?
Our only expansion of the fleet took place when we had a tendering situation in which the costs that a bus company presented us with appeared unreasonable. We declined that offer and suggested to the council that, under such circumstances and given the tender prices that we received, it would be sensible and save a considerable amount of money if the council invested in more vehicles and undertook the work. We can regulate the market if we need to do so, but that is not our first option. We want to keep the fleet at its current levels and leave enough work for all the other independent operators.
When you decided to expand the fleet, did that have a knock-on effect on other, smaller private contractors, such as those that undertook school runs?
In fact, the major—and potentially the monopoly—operator suffered as a result.
That brings us to the end of our questions for Dumfries and Galloway Council. I thank the witnesses for their evidence.
Thank you for allowing us the opportunity to give evidence.
Forgive me, convener, but I have to go to another function.
Okay. We move on to our second panel of witnesses. Actually, we have only one witness, Mr John MacEwan, who is the proprietor of MacEwan's Coach Services. Mr MacEwan, as you have heard some of the questions that we asked the representatives of Dumfries and Galloway Council, you will know about the committee's areas of interest. We are examining the operation of the Transport (Scotland) Act 2001 and its impact on the provision of bus services throughout Scotland. I invite you to make some introductory remarks, after which members will ask questions.
Nineteen years ago, I founded my company with £300 and, on the back of deregulation, it has grown into a business that turns over about £1.5 million a year. We have had to dedicate all our resources to local authority contracts, because margins have become tighter and tighter and drivers have become scarcer and scarcer. We now have to concentrate on bus services to deliver the most economical package. For example, we cannot hire out coaches to people any more, because they might not pay for them. Things are so tight that we cannot take such a loss.
I assure you that our job is not always easy. You referred to problems in recruiting bus drivers, an issue that the witnesses from Dumfries and Galloway Council raised earlier. What is the problem? Is there a lack of people with appropriate public service vehicle qualifications, or are people moving to the central belt to take up employment opportunities? What are the wage rates for full-time drivers in the Dumfries and Galloway area?
When I started 19 years ago, if you could offer an annual reward close to double figures, in thousands of pounds, you would get quite a good driver. Now if you drive in Edinburgh, as I am sure all members do, you will see stickers on the back of Lothian buses offering annual average earnings of £20,000 a year. We have had to move towards that, through productivity allowances and so on. We do not employ an organised labour team; we employ individuals.
In informal discussion with some of the ferry companies, we heard that in the Stranraer area the unemployment rate is still above the Scottish average. I do not know what the situation is in Dumfries and Galloway as a whole, but it seems surprising that, despite the fact that the unemployment rate in Stranraer is above the Scottish average, you cannot find people who are interested even in taking up the qualifications.
The word "suitability" comes to mind. The job is important. Whether we are talking about flat-cap drivers who are 50 years old, have paid for their car and house, are stable financially and want to drive a school bus for four hours a day or people who want to be out as professionals in pristine uniforms for 45 hours a week, they must be suitable for the industry and want to do what the industry requires of them. We will not train or take on to our books anyone who will not deliver the goods—the job is too important for that.
Earlier, we heard about some good practical examples of the local authority trying to provide services to local communities that demand them. The Scottish Executive has tried to address such issues through legislation that allows local authorities and private operators to enter into quality contracts. You have highlighted a few issues that exemplify the problems that you have with that, but would you in principle be willing to enter into a quality contract that would allow you to deliver a service that local communities requested and that would allow the local authority to provide support for the bus facilities required?
Are you talking about replacing a council service, or are you talking about an add-on for quality? Is it just the top-up that you are talking about?
I am talking about providing the quality service that each community requires. You said that you would not want to enter into a five-year contract if you did not think that you could deliver the service over a five-year period. However, we are talking about firm contracts, in which you would, in return for a subsidy, deliver a particular service to a community that required it.
Of course I would do that. I am an industry professional; I do my best all the time. I have not increased bus fares in the Stewartry of Kirkcudbrightshire for 14 years. We have not increased bus fares on the historic Edinburgh corridor for 16 years. People say that only a stupid businessman would do that, but it is my attempt to say, "Come and try me," to people who do not use the bus service. When they realise how cheap it is, they might replace their regular means of transport with a bus.
As Councillor Mitchell rightly said, we can have all the concessionary travel programmes that we want but, if we do not have a bus service, people cannot use the concessionary travel. You may be able to consider providing a service from A to B, but if village C does not have a bus service and you can identify the possibility of setting up a service there, would you engage with the local authority to try to enter into a contract with it to deliver that service?
I would make the suggestion, but my working time is not infinite. I have enough to do in my working day without writing letters to local authorities, asking whether communities are being deprived. There are community councils with plenty of clout at council level that can make those suggestions. Those suggestions ought to come from the people, direct to the council.
But, as a businessman, if you saw a market, would you not go after it?
Aye, definitely, but I have not seen one for a long time in Dumfries and Galloway.
What is your view of partnerships? Obviously, the Transport (Scotland) Act 2001 provides for the formal partnership agreement, but the word "partnership" is bandied about a lot. How do the small operator, the local authority and all the other stakeholders in public transport fit together?
I have nothing against the way in which the quality partnership scheme works, but you have to be careful to ensure that favouring one stakeholder does not cripple another. We have to go back to the terms of the Transport Act 1985, which kicked in in 1986 and effectively brought about deregulation.
In fairness, the figure is 85 per cent for the whole of Dumfries and Galloway and 99 per cent for the area west of Dumfries.
Thank you, convener. I missed that bit in the submission.
We were talking about the relationships that involve you, the council and the other people in the industry and in public transport. Would such relationships be enhanced if you were in quality partnerships and if you proceeded on the basis of quality contracts? Would that make a significant difference?
A case can definitely be made for such an approach, especially if money for enhancements is not available. After all, we are fighting the car. At the moment, we are hearing about all kinds of issues, including pollution. Indeed, last week, the Prime Minister said that environmental changes would mean the end of the world. No one has mentioned that yet.
Do you agree with the council's statement in its written submission that there was
I agree with that completely, because there is not enough of a return to justify the investment. It might be possible to soften that slightly by extending the length of a contract. I believe that, at the moment, the legal limit of a procured contract is five years. If we could make the limit eight or 10 years, that would give a longer write-down period for the vehicle. In any case, the vehicle will need to be changed at the end of 10 years. Guess who will be standing out with his hand out the next time around if the contract is won?
On that point, evidence that we heard last week from the Mobility and Access Committee of Scotland would strongly disagree with that viewpoint. After all, it is a basic human right that people should be able to get around their community. I, too, disagree strongly with the view that the Disability Discrimination Act 1995—which is actually UK legislation—is the wrong way forward. The quicker we can give all members of our communities the ability to move freely, the better. It is true that delivery of the provisions will incur costs, but we will simply have to manage them.
As the DDA is a reserved matter, I think that we should move on.
It would soften the capital requirement.
Apart from your simply receiving more money, is there any other way of getting better buses into the system?
To be honest, I would go along with that. In fact, that is quite a good way of putting it, particularly as far as the rural environment is concerned.
What will happen if, as you suggest, the current situation is not sustainable?
The situation has not been sustainable for years. We need outside help, which is where the Scottish Parliament comes in. A major company adopted the term kick start for one of its initiatives; however, I do not think that it is possible for the industry to kick-start itself anymore, unless the price of petrol is increased to £4 or £5 a gallon or whatever it takes to break car drivers' psyches and make them use the bus out of necessity. However, doing that might well raise the issue of civil liberties.
What do you want the Parliament and the Executive to do? Do you simply want financial assistance?
What else is on offer?
Part of the aim of our evidence gathering is to find out what can be done—other than simply to put more money in—to deliver and improve the quality of sustainable rural transport services.
Money is the crux of the matter. When I started 19 years ago, I was paying 23p a litre for diesel. The chitty that came for my 9,000 litre delivery last week was for 71.5p a litre, net of VAT. Costs are going up all the time. We hear that inflation is around 2.75 per cent, but the price of spare parts is going up faster than that. Because of the shortage of drivers, wages are going up a lot faster than inflation. We have had to push the wages issue in the productivity deal that we are now offering. Those increased costs have to be paid.
Before I come on to the main question that I was going to ask, I want to ask whether investment is required now because of a lack of investment in transport in recent decades. I appreciate that you will have to make a significant investment, but has there been a lack of investment in the transport industry since deregulation?
It is a fair point. However, you have to remember one thing: the greatest capital cost in our industry is the vehicle. A vehicle's value does not appreciate; it depreciates. As a result, vehicles must be renewed.
Is that situation any different from the situation in any other industry?
Possibly, but the capital—
I am sure that in order to meet current technological requirements a number of industries have had to invest over the years—some of them with no public subsidy whatsoever. I appreciate the complexities of the transport industry, but I want to make the point that people have had to invest in industry. Have smaller operators such as you not been able to do that?
We have a totally procured work load—if that is the right way of saying it. I tender for all my work. Circumstances change. Vehicles have a shorter lifespan and depreciate more quickly now than ever before; they are not built to last the way they were in the 1950s and 1960s. On-costs are higher and there is less time to make the vehicle earn its keep in its working life.
My main question was on your relationship—or perhaps there is no relationship—with the larger companies such as Stagecoach. Are those large operators seen as predators that take over smaller operators' services and prevent them from operating?
Very much so. When I am awarded a contract in which I have committed myself to putting in a newer vehicle, I am sometimes concerned about whether the contract will run its term. After all, a predator might turn up who will say that they will operate the contract for nothing. There is a moral requirement on operators not to take taxpayers' money if a service that they were going to charge people for can be operated for nothing—that is fair dos. However, what about an operator who buys a vehicle or has a vehicle built in a factory in the four-month run-up to the beginning of the contract period? Who takes the hit on that? Someone talked earlier about operators taking hits; I take them every day.
I want to return to concessionary fares, which you mentioned a wee while ago. Do you get the full fare level?
No.
So what happens? What other problems do you have with the concessionary fare system?
Dumfries and Galloway Council gives us 54.56p in the pound and Scottish Borders Council gives us 60p in the pound. I hate to think what we get from Midlothian Council. Even though our ticket system accounts for every passenger on every journey, that council does not work the system the way we want it to and has a different means of assessment that does not seem to be fair. It is all done on averages and suppositions. When the cheque arrives, we simply look at it, say, "Well—that must be what it is," and put it into the bank. It seems to be impossible to work out what we should be getting from Midlothian Council.
I want to ask about concessionary fares for elderly people—
Please excuse me. I waffle. If I am not answering a question, please ask it again as bluntly as you like in order to save time.
I want to raise two matters. First, have you been involved with the pilot scheme for under-18s and if so, do you want to comment on it? Secondly, do you want to comment on the concessionary fares scheme for the elderly? Are the reimbursement figures that you gave the same as those for the concessionary fares scheme for the elderly?
The figures referred to concessionary fares for the elderly; we do not get anything—
That is fine; it was just that you went on to talk about children and I was a little confused.
If children who should pay the full fare pay the half fare, we get no money back. Drivers have no control other than to ask them for identification, which they never have.
I understand that, but I think that a concessionary fares scheme for under-18s operates in part of the area. I was confused by the different schemes.
I am sorry, Dr Jackson. The scheme is negligible and there has been no awful big change on our routes. However, it is early days.
Are you talking about the under-18s scheme or the scheme for older people?
Plenty of older people are travelling—at 54p in the pound reimbursement you need not worry about that. The concessionary fares scheme for the elderly has been a great success. One driver refers to his bus on a cold winter's day as a heated waiting room; people take the bus, wherever it is going, because it is warmer than staying at home. I had reservations about the scheme—purely from a financial point of view—but the reimbursement system kicked in and the scheme has gone from strength to strength. We encourage people to come and live in Dumfries and Galloway and many people who can afford to retire here regard the scheme as a safety net. It is part of the package.
Alex Fergusson talked about the long journey to Edinburgh and issues such as through-ticketing. Have you been involved with those issues?
It costs me about £28,000 a year to offer people the concessionary fare and subsidise the discount myself. I will be happy to collect that money from the Scottish Executive any time it wants to pay it.
You mentioned the different levels of reimbursement from three different local authorities. Do you run services that pass through several local authorities? For example, who reimburses you for concessionary travel on the Dumfries to Edinburgh service? Do you receive a combined reimbursement from the different local authorities? The situation seems to be confusing.
We periodically send returns to the local authority in question. Our ticket system is precise enough to identify how many Scottish Borders travel card holders asked for reduced or free fares, and how many Midlothian, Strathclyde or Dumfries and Galloway passengers did the same.
So your evidence would be that, as a bus operator, you would much prefer having a single-rate reimbursement across the country, which would be operated via, perhaps, the Scottish Executive, rather than having five, six or seven different rates of concession.
That would be easier for me, yes—but where would that leave the local authority?
Sure—we have to examine that side of things, too. I think that the majority of us are keen to have a unified system that allows unified travel throughout the whole of Scotland, instead of having the current regional patchwork. Would you have any concerns if the concessionary scheme were to be expanded to include young people? I take it that, as long as you were being reimbursed, you would not have concerns, but would you like to share any comments about that with us?
With a view to young people becoming accustomed to using the bus and being potential bus travellers for life, it would be good marketing.
So you are quite positive about the idea.
Yes—if the money is there to pay for the scheme. If I run a bus from Dumfries to Edinburgh with 10 passengers who pay me 10 adult fares, that is £50, which does not seem to be a lot. If I run a bus with those 10 passengers paying £50 of adult fares, along with 10 children who pay nothing, and I get reimbursed for that, there must be a benefit there, but how many of those children might have used the bus anyway, even if it was not free? That shows the intricacy of the scheme.
You recognised that my earlier questions were about money, and it is important to clarify that my argument is a political argument. I argue that bus services should be provided as a service, not as a commercial enterprise, and that is where you and I disagree. Bus deregulation has been a problem, not a boon. Local authorities, or the Executive, are now spending a lot of money on subsidising services and I wonder how much extra it would cost them to provide those services.
That is difficult to say, because we have write-downs, capital allowances and years in which there is more investment for a new contract. Some years I lose money and some years I make a profit. Last year's profit—whisper it—was £23,000 on a turnover of £1.5 million. Do you see why I am nervous about costings?
Absolutely, and you must see why I support the municipalisation of the bus services, because, at that level of profit—
That is the polite term for renationalisation.
Yes, absolutely.
You would lose a lot more than you would gain on that, but we are not here to discuss that matter.
You mentioned the shortage of drivers and said that you are offering drivers £7.25 an hour but not getting much of a response. What is your £7.25 an hour based on? You talked about a productivity deal; is that deal negotiated with a local trade union? Do you have a trade union in your company?
As I said, we have non-organised labour and have seen fit to pitch the wage at £7.25 an hour. In April, I introduced a scheme with a productivity allowance, whereby the basic pay was topped up with a professional bonus of £8 a day, but that has not been enough to sort the problem; we still do not have a queue of bus drivers or people who want to be bus drivers. I understand that the Stagecoach rate will go up to £7.01 quite soon and I felt that my old retainers deserved more respect for the work that they do than to be seen as second-class citizens. We have therefore kick-started—if you will pardon the pun—the new pay scheme simply to reward drivers and make the job more attractive to young people.
Do you have a contracted arrangement over a certain number of hours a week or is it simply a casual work force?
We have a contracted agreement, but it depends on the drivers' shifts. We do not start everybody at 6 o'clock in the morning and finish them at 5 o'clock at night.
Does everybody work a certain amount of hours a week?
Yes.
What would those hours be?
Drivers work an average of 45 hours a week at the moment.
We discussed the same matter earlier with the ferry operators, who told us that they pay £17,500 a year for caterers. At your top line, you are talking about £15,400, so there is a couple of thousand pounds difference between what the ferry operators offer for what they consider not particularly skilled, although important, labour and what you pay for driving buses. That is the competition with which you are dealing.
Stop—there is another influence over that. Drivers who start at 7 o'clock in the morning will work to 7 o'clock at night and have four hours off during the day when the bus is not required. Under the agreement, they are paid for the first hour of their breaks at £7.25. We do not harmonise the agreement with holidays like the national health service does to meet the working time directive—we are not as tight as that—but we reward our drivers for work done. The pay for a 10-hour day comes in at £72.50 gross, but drivers do not work for 10 hours. I cannot employ them to drive a bus for 10 hours a day every day of the week because of the drivers' hours regulations and the European Community regulations that we are faced with. There is a wee discrepancy there. It is possible for people to earn in a five-day week, we think, about £18,500. If they want to go on to a domestic-regulated six-day week—which is still permissible just now, before the working time directive comes in—it is possible for drivers with my company to earn just over £20,000.
Broadly how many hours would drivers work in a six-day week to earn that?
They would work a hell of a lot of hours.
Yes—a lot of hours.
I based your £7.25 rate on a 40-hour week, but you say that you have a working average of 45 hours, so you are talking about more than 50 hours a week to get to £20,000.
You have to satisfy yourself with your own definition of the word "work". Is work being parked in a lay-by, going for a haircut, taking your car for an MOT or going to the garden centre to get some plants in the gap between your journeys? Drivers are not on standby; that time is effectively their own. It may be within the day's work, but is it work? If we plan our roster a fortnight in advance, a driver can say, "Well, I've got a dentist's appointment on such-and-such a day. I'll go there in between my journeys. I'll ask for that shift on that day so that I can still be paid for the day but achieve something that I need to do as well."
I am sure that we could discuss your concept of work. It is a pity that you do not have trade unions in your company, but perhaps your definition of work helps to reinforce my idea of why I would like to see the remunicipalisation of bus services, which would encourage better contracts of labour and more secure labour. Perhaps that explains why Lothian Buses is able to offer the wages that it offers and to attract bus drivers. However, you obviously saw an opportunity 19 years ago and you went for it. Whether that opportunity still exists remains to be seen, given the level of subsidy that the public pays for bus services, not just in your area but across Scotland. That is perhaps a question for another day.
Over the past 19 years, what has been the trend in full-fare passengers on your services? I take it that you do get some.
Oh, aye, from time to time. The modification from the old, historical, pre-deregulation days, when the bus service was virtually a state-owned monopoly—with only one or two private companies dating back to the 1920s, when local authorities and politicians had no hands-on influence over the bus industry—and when there were blanket subsidies, or rather blank-cheque subsidies, was difficult for some companies. I know that, with deregulation in 1985, when socially necessary services had to be subsidised and tendered for, private companies found it very hard to adjust to the new regime.
Just over the past 19 years—
That is the period of deregulation.
Yes, but I am talking about the period over which you have been running your firm. On the routes that you have run over that period, what has been the trend for full-fare passengers?
It has responded to service improvements.
Do you mean that you are carrying more full-fare passengers now?
I would think so, but more people of that age group may not want to drive. There is more congestion and there is free travel for older people, who might draw other people along with them.
Can I ask whether—
I am sorry. I am not not answering you; I am just trying to find an answer.
You have had your new ticket system for the past five years. Is that right?
Yes.
Presumably you have fairly good statistics for that period. Do you know what has happened to full-fare passengers over that period?
Yes.
What has happened to them?
Every route is different. Some have gone down and some have gone up.
Are you sure you are not involved in politics?
I am not trying not to answer.
Given that you want the full-fare passengers, because you receive the most money for them, I would have thought that you would be interested in which numbers are increasing or not increasing and why. I do not want you to give me any commercially sensitive data that the Stagecoach spy will run away with, but does a trend exist? We want more people to travel on the bus. If you have noticed success somewhere and failure somewhere else, what are the reasons for that?
I am thinking of a polite answer. There is no yardstick. Innovative services that have been provided have improved timetables. The Dumfries to Castle Douglas and Dumfries to Kirkcudbright services that now run every hour and half-hour have increased adult passenger numbers because of the greater flexibility. Passengers no longer have to stand about for a full hour to go home from Dumfries; they have to stand about for only half an hour. They can tailor their day better, because more travel opportunities are available. That investment by the local authority and the Executive has improved the number of passengers.
You have said that if service frequency is increased, there will be more passengers, which is what we would all expect. On routes whose frequency you will never increase, such as those up to Corsock or Laurieston—I am sorry for being a bit parochial—I take it that travel by full-fare passengers is virtually negligible.
We no longer serve Corsock.
A bus passed my front door this morning.
I am sorry—there is an early-morning bus, which is the college service. You are right and I stand corrected. However, that service—service 521, which provides the link to Dumfries from New Galloway—involves only one bus in the morning and one at night from Monday to Friday.
I have a quick question, which is related to what Alasdair Morgan has asked about. I would like the committee to have a true overall picture. As you have said, things have changed over the past 19 years. Has your company changed its excursions or any other enterprises in which it has been involved, which might have changed how much money it has received from its normal work?
Not as such. The best way to put things is that, now that we are nearly completely funded by the public purse and passengers' fares, we have tried hard to get better at what we do to attract more passengers—hence the static fares commitment, although I do not know how much longer I can continue with that. Diesel is getting dear again, but there are no noises or blockades as protests on the M1 or M25 motorways this time. The situation seems to have been accepted this time, or somebody has said that there is no point in doing such things, and that there are wars to pay for, for example. I suppose that we are going to have to live with the fact that money is needed, so fuel tax revenue is also needed. Is that bad preparation for the dark day in 20 years' time when we are not going to have any fuel anyway? Should we not be thinking along such lines now?
So you have made no significant changes over the 19 years. You have talked about a £1 million turnover and the profit that you have made, but you have been involved in the same type of enterprise, more or less.
From a revenue point of view, the whole benefit of any personal investments or initiatives in my company can be lost at the stroke of a pen at the next tender. We have done things to nurture and to try to promote services to the public, as it is the public that matters at the end of the day, although some people say that nobody is going to travel on a bus and that buses should not be there because they cough out fumes. The marketing point matters most.
We are drifting back into an area that we have already been into.
Meeting closed at 12:13.