COMMITTEE FOR REGIONAL DEVELOPMENT
OFFICIAL REPORT
(Hansard)
Public Transport Reform
24 September 2008
Members present for all or part of the proceedings:
Mr Fred Cobain (Chairperson)
Mr Jim Wells (Deputy Chairperson)
Mr Cathal Boylan
Mr Allan Bresland
Mr Willie Clarke
Mr John Dallat
Mr John McCallister
Mr Raymond McCartney
Mr George Robinson
Mr Alastair Ross
Mr Brian Wilson
Witnesses:
Mrs Doreen Brown ) Department for Regional Development
Mr Brian White ` )
Mr Sean Johnston )
Ms Catherine Mason ) Translink/NITHCo
Mr Philip O’Neill )
Mr Ryan Simpson )
Mr Aodhan O’Donnell )
Ms Karen Magill ) Federation of Passenger Transport
Mr Niall McKeever )
Mr Michael Lorimer )
Mr Allan Davidson )
Mr Peter Bunting ) NI Committee, ICTU
Mr Michael Doran )
Ms Carla McCambridge )
The Chairperson (Mr Cobain):
The first presentation is from the officials from the Department for Regional Development. I welcome Mr Brian White, Mrs Doreen Brown and Mr Sean Johnston.
Mr Brian White (Department for Regional Development):
The Minister for Regional Development, Conor Murphy, wrote to the Committee in June and departmental officials briefed the Committee on 25 June. I will not go over the same ground, but I will highlight some of the points that were made.
Committee members will recall that a three-tier structure was proposed. That proposed structure included a top, Government, tier with responsibility for broad policy, legislation and regulation; a middle tier with responsibility for the design and management of services and securing their provision from the third tier; and a third tier comprising of transport operators. That structure was proposed in the expectation that there would be consumer input at all levels.
The structural proposals were consistent with principles that were agreed by the main public-transport stakeholders a couple of years ago. Those principles included the existence of a regulated and integrated system in Northern Ireland, which would allow public-transport users seamless services, such as interconnecting services, common ticketing arrangements et cetera. Others were a move from capital funding to revenue funding of services for a clearer link between the services provided and the revenue made available; and a clear separation of the roles and responsibilities, and a split between the design and delivery of services.
Current objectives include an improvement of public services through better integration and improved information; support for the regional transportation strategy; support a greater use of public transport in line with the economic, social and sustainability objectives of the Executive; and a maximisation of efficiency and value for money.
Importantly, since the publication of the consultation paper, A New Start for Public Transport in Northern Ireland, Regulation 1370/07 has come into force in the EU. That regulation recognises that many public-transport services may be uneconomic, and it is designed to allow the payment of compensation and a fair and consistent continuation of those services throughout the European Union.
The regulation builds on an earlier judgement in the Altmark case, which tested whether state support constituted illegal state aid, and set out the conditions in which compensation could be made. The part of our submission dealing with regulation 1370/07 sets out the framework for that. There must be a clearer identification of public-service obligations. Any compensation that is paid must be objective and transparent; there should not be overcompensation and, if there is an internal operator, compensation must not exceed that which is needed by an efficient and well-run organisation. Furthermore, the regulation sets out a transition timetable.
An important point, in the Northern Ireland context, is that the regulation allows for internal operators. NITHCo/Translink would be considered an internal operator in that framework. The regulation allows monopolies, but it has strong mechanisms to prevent overcompensation, and those mechanisms must be transparent.
Some of the consequences of the regulation for the Department are detailed in our submission. The view of the Department is that there is a need for a new, tighter arrangement between the Department and NITHCo, with a clearer specification of the level of services provided and the level of support offered. Existing work that has been done can be built upon; however, the Department, at the very least, will have to develop an enhanced contracting capacity for dealing with NITHCo/Translink, in addition to the contracts currently in place in relation to community public-transport services.
Furthermore, there is an issue concerning rapid transit, a subject to which the Committee has given a considerable amount of time. If a new service is to be introduced, it must be demonstrated that the provider of that service is not being overcompensated. Advice given to the Department — albeit in another context — is that the best way to achieve that is to ensure that any new service is openly tendered. That raises questions about the departmental structures for doing that.
The final part of our submission to the Committee reiterates the business case options. As I explained, the last time I discussed this issue with the Committee, the draft strategic business case identified three main options for the future which needed to be worked out in greater detail. The first option was to do nothing — that option was included to provide a benchmark against which the others could be judged. The second option was a revision of the NITHCo/Translink model, which would enhance the role of NITHCo; and the third was the establishment of a departmental agency to undertake the work of a middle-tier organisation.
In conclusion, there is no perfect model for the delivery of public transport. I am sure that the research that has been commissioned will demonstrate that this particular cat can be skinned in several different ways. However, a common feature is an increasing recognition that there needs to be some form of organisation — frequently middle-tier — that sits between, on one hand, the operators and, on the other, the legislators, and has a responsibility for designing and co-ordinating the different elements of the public-transport family.
The Chairperson:
Will you provide some more background on the issues involved in switching from capital funding to revenue funding, and the consequences of that, given that budgets are quite competitive?
Mrs Doreen Brown (Department for Regional Development):
At the moment, the Department provides large amounts of capital funding to NITHCo/Translink for the purchase of buses. That is not a transparent way of funding, because one cannot see what is delivered for the money that is provided. One can see that a new bus has been bought, but not the service that it provides. It is that lack of transparency that the European regulation requires us to address. There would have to be a DFP agreement to switch from a capital budget to a revenue budget.
DFP is aware that we are examining those proposals, and the principles underlying them. We must develop those proposals with the Department.
Mr White:
It is not an all-or-nothing approach: our proposals recognise that there will be a continuing need for capital input, particularly for railways.
The Chairperson:
We will address that issue later. Capital funding is easier to obtain through the budgets than the revenue of a company. Budgets are quite competitive, and they will probably be even more competitive in this franchise. The Committee wants to ensure that the transport industry is not starved of the resources that it requires.
Mrs Brown:
We cannot move to a new system unless we receive adequate levels of revenue to support the services. At present, capital funding is unavailable to any operator other than Translink. Therefore, private operators in competition with Translink must fund their own capital needs. The present system is not considered to be a level playing field, and it is being challenged in other jurisdictions.
The Chairperson:
Brian, will you elaborate on the issue of open competition?
Mr White:
Doreen said that there is a degree of competition in the system. A number of private operators provide public transport services, but that tends to be in specialist areas. The Minister has said that he does not foresee a transport free-for-all, but that Translink will remain the lead provider of public transport services, while others will have the option of joining the system.
Our proposals are quite different from what takes place in Great Britain, where a deregulated system exists. The proposals do not suggest that that system be used. However, that system does allow for a degree of competition to be defined by the policymakers.
The Chairperson:
How can open competition exist in a regulated market, and who will set the ground rules for that?
Mr Johnston:
Competitions can be run to seek specific services.
The Chairperson:
I understand that.
Mr Johnston:
The system will still be regulated, but that does not mean that there cannot be competition. The requirements of a competition can be specified.
The Chairperson:
Specifying requirements runs contrary to the —
Mr White:
The models imply that that is done by a middle tier operating within the —
The Chairperson:
Fundamentally, the system will be difficult to implement. The whole transport system is not going to be open for competition, if a specific field within the system is regulated. The whole transport system will not be open for competition; what is open will be up to the regulator or the regulations to decide.
Mrs D Brown:
It will be possible to decide the extent to which you want —
The Chairperson:
The Department will decide what open competition is, not the market. My point is that it is not open competition, as we understand it. It is open competition regulated by the Department, because it will decide which part or how much of a service will be opened up to competition.
Mrs D Brown:
It is controlled competition.
The Chairperson:
Whatever that means.
Mr Wells:
What is our role, as a Committee, in the process? I have been round the block a few times, and it is unusual to be presented with a series of options when the Minister has already given his preferred option a papal blessing, as is it were. As that is the case, why are we here?
Mrs D Brown:
The Minister has expressed his preference for a departmental agency, but he has said that he is not wedded to that decision, come what may. We have started an outline business case that examines three detailed options.
The outcome of that process could well change the Minister’s mind. We are not looking to the Committee today, or in the near future, to chose one of those options; rather, we ask, is the Committee satisfied that the options that we are pursuing are valid, or, are there other options we need to pursue?
If that is the case, we would then come back to the Committee —
The Chairperson:
Saying no. [Laughter.]
Mrs D Brown:
Whatever options that you want us to explore, that will be done in the outline business case (OBC) that we have started. We do not want to go too much further with that until the Committee has said whether it is happy with what we are covering.
Mr Wells:
It would be more normal for the various options to have been appraised and for the Department to have said: “In the initial round, option ‘X’ has scored higher than most.” In this case, however, the Minister has intervened and said: “This is what I want.”
Mrs D Brown:
I think the Minister would want us to make it clear that he has not said that. He has not decided to go for the agency option, come what may; he has decided that, as we embark on this piece of work, it currently looks as though the agency is the most attractive option. The Minister wants the work of the OBC to be completed before he takes a view. We are coming to you early in the process, before the OBC is finished, and a preferred option has been selected; if the Committee wants to have an influence on the options that we are looking at, now is the time to do that.
Mr Wells:
Brian mentioned a tender process, and I am intrigued as to how that would work in the Northern Ireland context. How does he propose that we have an open and fair tender system?
Mr White:
I do not see how we would not have an open and fair tender system in the Northern Ireland context; I am not sure what point Mr Wells is trying to make. If the issue is specifically in relation to rapid transit, which I did mention, I do not see why it would not be possible —
Mr Wells:
Would Translink be on the inside track, as it were, in any tender process for any form of public transport?
Mr White:
Not necessarily, it depends on how the tender is phrased. It would have to be made very clear that, for example, any proposals put forward by Translink as part of a tender process, did not involve hidden cross-subsidisation. If that was not done, and Translink was awarded the contract, then our next stop would be court, probably in Europe, defending the indefensible. We need to specify things in such a way that there is a level playing field for the different people competing for the project.
Mr Wells:
That is reassuring. I was in London recently and was extremely impressed by the Oyster card system; one prepaid card that covers every form of public transport, with no need to produce cash the card is just whisked across the scanner. I presume that no matter who gets the tender for the rapid transit bid, that that would be integrated into all public transport systems in Northern Ireland?
Mrs D Brown:
Yes, that is the intention. The thinking at the moment is that it would be part of the work of the rapid transit project team, which we are establishing to look at the development of an integrated ticketing system.
Mr Wells:
That is good news.
Mr Dallat:
We all know that to design any new system we need really good architects in the background; do we have that? The Department’s role in the past has not been [Inaudible due to mobile phone interference.] No offence to those present, but last year, according to their accounts, we forked out £374,000 to say “slán abhaile” to a former chief executive. According to their accounts this year [Inaudible due to mobile phone interference.] there will be another £279,000. In that situation, how can anyone be sure that transport per se will be better. I think particularly of the railways. If there is capital expenditure on a bus, we can see the bus. We certainly did not see the £20 million that went missing on the Belfast-Bangor railway: we never found out where that went.
The environment is a bigger issue. In the mornings, I sit for an hour at Sandyknowes roundabout; there are Goldliner buses running every 15 minutes between Derry and Belfast while the railway sits there in a heap. In the wonderful new model of agencies, accountability and efficiency, where are our railways?
Mrs D Brown:
The railways will be part of this arrangement. The last thing we want to do is to design a system in which we lose the integration that already exists between bus and rail services.
Mr Dallat:
Does it?
Mrs D Brown:
We want to enhance that. The Department will continue to provide capital funding for the railways, although the system will get its public service obligation (PSO) funding as well. The railway system capital investment requirement is big, but it is spiky, and varies greatly from year to year. It is not thought that that type of service could easily be funded through a revenue source. It is important that the railways are part of the package, are fully integrated and continue to develop.
Mr Dallat:
Can you see an agency running buses and encouraging people onto the railways?
Mrs D Brown:
The middle tier, however it ends up, will be responsible for all public transport. It will be responsible for promoting bus and rail services and integrating the rural transport funds, door-to-door services and rapid transit. It would not be set up to promote bus services at the expense of the railways. It would deal with all aspects of public transport.
Mr Dallat:
I am talking about the architects of the new system from the Minister down. Can you see Translink being enthusiastic about encouraging the private sector?
Mrs D Brown:
You will have to ask Translink about that. [Laughter.]
Mr Dallat:
I always start with the bosses.
Mrs D Brown:
You will have to ask Translink about that as well. I imagine that it might be less enthusiastic about competition than we might be, but it is well able to speak for itself.
Mr McCartney:
Brian White said that there was no perfect model. How do we decide on the best model at the end of this process? How do we satisfy ourselves that the agency model is the best, as distinct from the current one?
Mr White:
One way is to try to measure it against the principles that were set out. I was trying to make the point that there may be no perfect model, but there may be better models, particularly in our local context, than others. We are looking forward to the work that will be done on the outline business case. That should give us a greater degree of information, which will enable us to make judgements between one potential structure and another.
Mr McCartney:
Is it the case that the process is not an examination of a model that worked somewhere else, with a conclusion that it should work here? It is a process relevant to here, rather than saying it worked elsewhere, such as the Scottish model that we heard about.
Mr White:
We must all be very careful. Things are different elsewhere. In Great Britain generally, bus services are deregulated. We are not proposing to deregulate bus services as part of any package. There are more tiers of government on the Continent that are directly involved in the provision of services. In Germany, for example, the railway system is state-run, and the provincial governments have responsibility for municipal transport. We do not have the same complexities of Government structures that other places have to deal with. It is difficult to go elsewhere and say, “That works there, let’s pick it up”. We must develop our own arrangements; however, they must be guided by key principles that work elsewhere.
The Chairperson:
What is the methodology for the models that you are going to look at?
Mr White:
The strategic business case, which you have in front of you, sets things out in some detail. However, the outline business case will go into even greater detail. The Committee will be furnished with the outline business case when it is completed. A heavy paper will land on your desk.
Mr Ross:
I have no difficulty with what you say about private involvement in things and a revenue-based system, but in terms of the extent of private sector involvement, is there a danger that they would choose the more profitable or popular routes and Translink would be left with the rest? That would impact on them. What role does the regulator have to ensure that that does not happen?
Mr White:
If there is a regulated system, someone could decide which parts of the system would be tested — through competition, if so desired. In those circumstances, you could avoid cherry-picking purely by the way in which the contract is set. If you were tendering a profitable service, you would expect an operator to pay money for the privilege of running that service. That money could be used elsewhere in the system. Equally — and this happens elsewhere in the United Kingdom —an operator’s services are, perhaps, not economically viable. Those services could be put out to tender, but that process would involve a degree of subsidy. The system can be managed to ensure that you do not end up with a cherry-pickers’ charter.
Mr Ross:
Would the money from the more profitable area go back into subsidies if Translink were left to manage the rest of the network?
Mr White:
Potentially, that is achievable within the system as it is being discussed.
Mr Boylan:
We have a big rural network. How would you encourage people to use public transport and guarantee value for money? There is a climate change issue. Everyone is talking about urban areas and rapid transport, but there is a big rural network out there — how will that be addressed by using this model?
Mr White:
There are already a range of services. The current system involves a degree of cross-subsidisation from more- to less-profitable routes. The Department also operates the rural transport fund, which provides support for certain public transport services in rural areas and in some towns throughout the Province there is door-to-door transport. There is no reason for that service to stop. A middle-tier body will operate within overall policy and guidelines set by the Assembly, Ministers and the Department, and it will be expected to work within those guidelines to achieve a general improvement in services. Precisely how and what support would be given is something to be decided in the future.
The models that have been presented allow for decisions to be taken as to how resources will be provided. I think that as well as that, people will be encouraged to use public transport through the encouragement of fully-integrated systems.
Mr Boylan:
Integration and inter-connection are something that we need to take seriously now, even in this model.
Mr White:
I accept that part of the issue is that the proposals before the Committee will take some time to work through and will require legislation. I am certain that, when colleagues from Translink come before the Committee, they will say that they are committed to providing the best possible service, just as we in the Department who are spending money to provide and support road transport services will do the best we can. We expect, in current circumstances, to be scrutinised on that by the Committee.
The Chairperson:
One of the Committee’s questions is how unprofitable is the provision of transport services to rural areas. There are big social issues in those areas and we will want to see those contained.
Mrs D Brown:
Absolutely. The attitude of the Department is that public transport is made up of two elements: the commercial element and the social element. Public transport is as much about social inclusion as anything else.
The Chairperson:
Once again, that is a bigger issue here than it may be somewhere else in the the United Kingdom. The Committee is aware of issues — especially around social inclusion — in rural areas.
Mrs D Brown:
The Department funds rural transport services and will continue to try to get additional resources in order to do more.
The Chairperson:
The Committee has discussed those services on numerous occasions, and will have the opportunity to do so again. Thank you very much for your time.
I welcome Catherine Mason and Philip O’Neill from Translink/ the Northern Ireland Transport Holding Company.
Ms Catherine Mason (Northern Ireland Transport Holding Company/ Translink):
Our presentation paper has sections summarising some elements of the strategic business case, and outlining the strategic context and objectives for public transport reform which come directly from thatt. It is important to say at the outset that we agree with the objectives. However, the environment has changed since the process started in 2002. At the beginning of the process, it was expected that the middle tier would be made up of local authorities. However, as transport responsibilities will not transfer, that does not necessarily make it a sensible direction in which to go.
After years of decline, public transport in Northern Ireland is now a big success. Regional transportation strategy (RTS) targets are being achieved. There is strong passenger growth and increasing satisfaction. Committee members may have seen a press release about our most recent customer satisfaction information.
In addition, as Brian said, a new EC Regulation (1370/2007) on public passenger transport services requires there to be a proper contract between us and the Department for Regional Development, and a change from capital to revenue funding.
There are deficiencies with all the options in the outline business case. For instance, “no change” is not an option under EC Regulation (1370/2007). Therefore, the way in which public transport is delivered in Northern Ireland will have to change.
There is a real risk that the agency will increase bureaucracy and costs, and duplicate functions. There may be a better option for a tailored model in Northern Ireland. There needs to be the new contract with DRD transparently setting out a high-level service and policy specification. The DRD focus is, therefore, on strategic service design. We would concentrate on network delivery.
There must be value for money, which is, obviously, central and is something about which the Committee would want to be reassured. There are ways that we could look at a simpler model that retains the benefits of integration, which are almost unique with regard to the level of integration in Northern Ireland compared with other jurisdictions. In addition, we would make a commitment to close any efficiency gap. Benchmarking is taking place as part of the outline business case.
All that will be carried out through subcontracting. The Committee talked about competition and making sure that it is controlled. A simple mechanism for ensuring controlled competition, which maintains integration while allowing the opportunity for private operators to participate in the market, is through subcontracting.
We propose to put out somewhere between 10% and 15%, but it is for others to take a view on the exact proportion. We propose to offer two types of contract, the first being an innovation contract. Some say that there is unmet need in the marketplace: if that is so, it will be catered for by such contracts. Operators who see the opportunity for new services may take out a contract with us that will allow them to keep the revenue. It is a net-cost contract. In return, we will give them a free start-up package, which includes access to bus stations, timetables, our integrated phone line and website, so that all the might of our marketing is put behind them. That will allow the operators to get going. We ask only that the operators run the service for six months, to avoid a huge churning of the market place that would confuse people about the services available.
To ensure that there is value for money, the ethos of the reform is that competition is a mechanism for ensuring good value from public-sector operators. Contracts wil be let on a gross-cost basis, meaning that private sector operators do not take the revenue risk. If they provide more economic services, the benefit goes back directly into the public purse.
The final element is to ensure that local authorities and local people are involved. Because of the changing terms of the review of public administration (RPA), we need to ensure a medium whereby local people can have input into local services. We propose the establishment of local transport partnerships that will involve local authorities, the Consumer Council, PSNI, Roads Service and other interest groups. We already have bilateral relationships with those groups; by getting them round a table they could provide feed back for DRD. Already, a performance and monitoring unit in DRD ensures the quality of our performance and neatly feeds back into the policy loop.
That is the essence of our thinking. The system will be speedily implemented, because no primary legislation is required. It is cheaper to run, and it meets all the objectives, though at lower risk. It continues to maintain control, integration, controlled competition, local input and innovation. It could be reviewed in three to five years, so it does not preclude establishment of an agency. None of this work would be nugatory if, ultimately, we adopted that approach. We want to work with the Regional Development Committee, or the Department’s consultants to increase detail and build on our thoughts.
Mr Dallat:
Catherine, when did you think up that scheme?
Ms Mason:
We have worked as part of the process and have expressed discomfort with the strategic business case. We were heartened to see the correspondence between the Minister and the RDC, suggesting that other options could be considered. We therefore worked through the summer to produce a carefully tailored option that we can discuss and that meets the different circumstances that have prevailed since 2002.
Mr Dallat:
My question was prompted by the non-verbal reaction from the public gallery. I take it that this has been a closely-kept secret, and that it has not been openly discussed?
Ms Mason:
We worked on it through the summer and we have only just reached the end of that process. The paper was given to the DRD on Friday so, as yet, we have had no detailed discussions on it. However, we have exposed our thinking all through the process, so there is nothing substantially different.
Mr Dallat:
You could almost describe your presentation as an exclusive?
Ms Mason:
No. I describe it as focusing on the objectives in the strategic business case, the changes in the environment, and on finding the best-tailored solution for Northern Ireland.
Mr Dallat:
To tell you the truth, I was looking forward to a report suggesting a healthy partnership or relationship that would make public transport lean. I hoped it would be based on wide discussion in the private sector. Clearly, that is not what we have heard.
Ms Mason:
The model that have I shown involves much partnership. It is a way to involve local authorities that, at present, does not exist, to ensure that the local voice is heard at the table. As regards private-sector access, it ensures that there is controlled competition, because that is the objective. That will be done through subcontracts.
Mr Dallat:
I am sure that you are aware of the reform of public administration. Local authorities here bury dead people and empty bins: often, they do not even get that right. I do not know how you would group public transport with those jobs. I am shocked. I am sorry for taking so long to ask my question.
Mr T Clarke:
John has already asked my question. DRD must be aware of the bones of your proposals. You must have had discussions, which may not have been public. DRD must have been aware of your thinking, your train of thought — excuse the pun. Will subcontracting include rural services?
Ms Mason:
Subcontracting could include either rural or urban services. In some ways, it does not make a huge amount of difference when it is done through gross-cost contracts. A tender is set for a service, which could be urban or rural
Mr T Clarke:
I wonder whether you would subcontract for less rewarding routes.
Ms Mason:
Because that will be done through gross-cost contracts, rather than through net-cost contracts, it will not matter. Subcontracts will be put out to tender; potential operators in the private sector will put forward a price for delivery that includes a margin. The route will then be let to the best-value operator. Consequently, they will make money out of it. The inherent assumption is that the private sector can potentially do things more cost effectively than the public sector. That tool ensures value for money; however, it is not the only tool that can be used to do that in the public sector. Competition is rife.
Mr O’Neill:
Gross-cost contracts ensure that integrated ticketing is safeguarded. Obviously, it is important that that level of fares is regulated. The fare level must be known in order to be able to make that mechanic work. The gross-cost contract is key to integration as well.
Ms Mason:
We have done a little subcontracting already.
Mr T Clarke:
My first point was about DRD’s response to your proposals.
Ms Mason:
Our proposals are simply an expansion of some other thinking that is contained in the outline business case. We are at the stage of making sure that all of the aspects of the outline business case are brought together slightly differently in order to tailor the model to Northern Ireland.
Mr T Clarke:
Will that comply with EU guidelines?
Ms Mason:
Yes, absolutely. All that is needed for compliance with Europe is a contract, which we will have, and revenue funding rather than capital funding. Competition is not essential for compliance.
Mr Chairperson:
I shall allow three quick questions now. The meeting is only the opening shot of discussion on the matter.
Mr Wells:
You have certainly brightened up a dull Wednesday afternoon. You have pulled the rabbit out of the hat, as it were. Effectively, the model is a fourth option. There are already three on the table. It is sufficiently different from the other three to be considered a new model. Are you aware that the Minister seems already to have indicated his preferred option?
Ms Mason:
I was heartened by the correspondence between the Minister and the RDC, which suggested that, apart from the outline business case, if there are further options that merit investigation — and I believe that that is what DRD officials said earlier — they should be pursued.
Mr Wells:
I am also intrigued by the idea that you would put out to tender for a series of 10%-15% of routes.
For instance, if the Ulsterbus Goldliner Belfast to Londonderry, or the Belfast to Dungannon, is your most profitable route, and you are making serious money, surely it is inevitable that that route will never be put out to tender. Surely it will be the marginal cases, where the routes are just about profitable, that will be given up to the private sector, and Translink will maintain all the cherries in its own bailiwick to ensure profitability.
Ms Mason:
We are trying to make the reforms on a gross-cost contract and not on a net-cost contract. If it were a net-cost contract, that would be a relevant factor. However, because it is a gross-cost contract, it is a supply contract. A gross-cost contract is similar to putting out contracts for filling holes in the road and someone comes back and tells you how much that will cost. Therefore, in a gross-cost contract, the public sector continues to hold on to the revenue. Consequently, the risk is not taken by the operator, which makes it easier for the small private-sector operators to become involved, because they do not have to take any revenue risks. It also means that it protects the value of important routes to the public sector. The agency will have to make the big decision as to whether is goes with gross-cost contracting or net-cost contracting.
Mr P O’Neill:
Maybe the Committee is not aware that we already contract out several of our Goldliner routes on that basis, including the Derry service, where we are in partnership with a local operator.
Mr McCartney:
I have several questions, and I would prefer to table them at the end of the meeting. They are long questions and it may be more suitable to get the answers in writing.
Mr Boylan:
Maybe the Committee could have more details on unmet need and innovation. Is there a plan to contract out and is there a customer base in rural areas?
Ms Mason:
The innovation contracts would be net-cost contracts. I cannot sit as the head of an organisation and not believe that it meets customers’ needs: it does. Our passenger numbers are going up and we are meeting more and more customers’ needs. We have just been through a series of network reviews across the whole of Northern Ireland, which have been incredibly successful.
However, if there is unmet need, an innovation contract would be a net-cost contract. That would be where a local operator sees a need for a service and will take the revenue risks, meaning that all of the revenue will go to the local operator rather than back into the public purse. Nevertheless, the local operator will take the risk on a service. There is a programme in GB called Kickstart. Translink will give local operators a kickstart package, which would include access to all of the integrated ticketing, integrated marketing and timetabling and ensure that the services were completely integrated with the rest of the network. We ask that the local operator should keep the service going for six months so that there was no instability in the marketplace. On that basis, if the operator were successful, and if there was genuine unmet need that Translink had missed, then the operator would deserve completely to take that route and to make money.
To protect the public purse, we would, potentially, look in later years for some element of profit-sharing. It is a mechanism whereby Translink will get the route started, but the public purse will not be disadvantaged in the longer term. Customers will benefit from extra services.
The Chairperson:
That will not satisfy the issue as regards competition. You will be siphoning off those areas that you do not want, even though you are subsidising the operator to do it. How do we know that the Goldliner routes are operated most efficiently? How can that be tested?
Ms Mason:
When talking about competition, we must remember that the biggest competition is the car. At the end of the day, people do not get up in the morning and wonder where they will take public transport that day. They get up, needing to go to work or school, or wanting to go shopping. If we get it wrong, or if we run our services inefficiently or we get our pricing wrong, we do not get our customers.
The Chairperson:
How can we test whether Translink is the most competitive for a particular route? Is the test to see whether customers use it?
Ms Mason:
If the market were let out to open competition, then that would be the mechanism whereby you would find out whether you had got it right — if it were a very open competition. The private sector would be involved in the network and benchmarking across would ensure that the routes were run efficiently. As we said earlier, we operate subcontracting on one of our major Goldliner routes, so we already have the ability to benchmark.
The Chairperson:
We will return to that. Thank you.
The Consumer Council will make a five-minute presentation, followed by 10 minutes of questions. I welcome Eleanor Gill, Ryan Simpson and Aodhan O'Donnell.
Ms Eleanor Gill (The Consumer Council):
Aodhan O’Donnell is our head of transport, and Ryan Simpson is our senior transport policy officer. I will provide a potted history of how the Consumer Council has got involved in public transport, and how we are moving forward on the issue.
As members will be aware, in 1986, public transport was deregulated in Great Britain, which split the entire system up. In 2002, the Office of Fair Trading queried the position regarding Northern Ireland, given that the market had been opened up in GB.
At that time, we entered into discussions with the Office of Fair Trading and the Department for Regional Development, because we did not think that what was happening in Great Britain would be particularly good for passengers here. In Great Britain, routes were cherry-picked and vulnerable routes, which needed to be retained, lost their subsidies. An emphasis was put on attractive routes rather than rural routes, and there was a big issue about stability and sustainability in the type of market that existed in GB.
As a result of our discussions with the Office of Fair Trading, an agreement was reached. I can supply the Committee with a copy of a letter that we received from the Office of Fair Trading, which outlines that agreement. The Office of Fair Trading said that it was content that, if all the partners in Northern Ireland that were involved worked together on the issue, they` would be able to come up a solution that met its needs on competition, but which would also lead to better regulation, rather than deregulation, and controlled, rather than open, competition.
As a result, the then Minister, John Spellar, commissioned a group in order to form a set of principles. The Consumer Council, NITHCo Translink and NICOA — which is now called the Passenger Transport Federation — carried out work over 2004 and 2005, and completed it in August 2005. The group produced a document, ‘Moving Forward’, which set out key areas of agreement for long-term goals on bus regulation and listed the key principles that were agreed with each of the stakeholders.
The document provided a set of principles that said that, at every part of the system, it must be ensured that people know their jobs and that there is transparency and clarity about roles and where each part of the system has decision-making. Importantly, it talked about the opening of competition and defined that as controlled and integrated competition. More than anything, the document was almost a charter for mobility, in that it recognised that not only Translink services for buses and rail had to be designed in the network. It recognised that it had to connect with rural transport, demand-responsive transport, and with taxis, which in rural areas are often the connectors to the network to move people on in Northern Ireland.
Each of the boards of the Consumer Council and NITHCo agreed the principles. On 17 January 2006, we met the chief executive of NITHCo to gain confirmation that those principles had been signed up to and agreed. Ever since, we have met as a very cheerful stakeholder group; we have met nearly every month over the past three years, moving forward on the ‘Moving Forward’ document. The fact that we are working towards something that could work for the future and be sustainable has meant that passengers have been patient with the level of change, which perhaps needs to be accelerated to generate interest.
Rather than just concentrate on structures, we must go back to what this is all about — better public transport for passengers and getting people out of cars and into buses and trains.
The Consumer Council has carried out research on public transport over the past 10 years or so, and we can share that with the Committee. In May of this year, we did further research with public transport customers to ask them specifically what was important to them. They said that they felt a real ownership of their buses and trains and the need to be able to move about. Punctuality, value for money and reliability were important, as were seamless services that allow passengers to get off a bus to a connecting train. They also mentioned London’s Oyster card that allows passengers to move from one mode of transport to another. However, that was not a big expectation; because of cheap travel, many of us can now travel around the world. Even in the outer Pyrenees, where I go on holiday, there is a little bus that stops in a village with a population of about 300 people. The bus arrives on time and takes you to where you are going. People cannot understand why these systems cannot work together. Integrated systems are important, as is being able to use their tickets. Those are the things that customers want and need for satisfaction.
A marvellous opportunity now exists to move forward and get the best public transport model, but it must be based on best principles, and those are reflected in the work that we have done. All the modes of transport must be joined up. We must ensure that any barriers to controlled competition are examined carefully, and I include in that the licensing requirements and all the different funding regulations. There must be a level playing field, even extending to concessionary fares. People cannot understand why concessionary fares are available on Translink buses but not on community transport.
In particular, we must ensure that everyone knows what his or her job is. We need people who are the holders of the ring, drawing the picture of what the network should look like, identifying what should be protected in that network and agreeing how it is best delivered in performance targets. We are in a changing environment. EU regulations are a big threat, but there is a potential need for customers to do this.
The Consumer Council supports the three-tier approach. Policy and regulation must be separate, from the network and design right through to delivery. The Consumer Council has been involved in many price reviews, and has taken part in the most recent of those. We will be doing more work on it, but it became apparent — and took us aback — that the impact analysis of fare increases on passenger numbers has not been answered to the level that we expect. We must turn to the customer, the passenger, and fit everything together. We must ensure that delivery is controlled; creating more problems is in no one’s interests. We want to concentrate on best principles and how to achieve them, rather than simply choosing from a list of options.
In making progress, the main emphasis of any proposed agency should be on reducing road congestion and getting people onto public transport. That is a common objective, which makes sense, and we are happy to discuss that further. We must have a staged and managed transition; however, there must be a target date, because the Office of Fair Trading (OFT) and the EU are looking on. We need policies that help people onto a level playing field, including being able to get into the bus stations that the passengers own. At the moment, however, Aircoach are sitting outside Jury’s Hotel, not inside the Europa. Competition is needed there, as is better regulation. Although I agree with what Translink have just said, there must be consumer input and consultation at all stages, not just in an influencing role, but on a statutory basis.
The Chairperson:
Thank you very much.
Mr Wells:
Presumably you listened with considerable interest to the recommendations made by Translink. When was the Consumer Council first made aware of those recommendations?
Ms Gill:
We received a copy yesterday.
Mr Wells:
You have not had a chance to have an in-depth look at them.
Ms Gill:
No. Structures are one thing; I am concerned that there might be a redrawing of the principles, which are an important part of our work to date and that of the OFT to ensure a managed and controlled path towards competition.
I have heard Translink voice their concerns around different areas, but I did not know that a new set of structural proposals and options would be presented today.
Mr Wells:
Do you see those options as being radically different to those which have previously been presented?
Ms Gill:
It is hard to know. In looking at some of the issues, you might think that it was an enhanced option of to do nothing and just add a little bit on. We are particularly concerned about the idea of sub-contracting from Translink. It is a concern that we have certainly raised.
Translink works in two environments: bus transport and private hire. That is a competitive environment. If you were my competitor and I subcontracted to you, you would have to send me your accounts or hourly rates etc. You would be handing over commercial and confidential information to a competitor. We feel that that type of network design and tendering needs to be done at the middle-tier level, with everyone being allowed to have input, and to identify what parts may be protected in it.
This is not about undoing what we already have, it is about ensuring that we enhance and build upon it, so we have grave reservations about how the tendering is done at the moment, never mind how that could be repeated in the future.
Mr W Clarke:
In relation to option three, the situation with the RPA, and the responsibilities of local authorities, they do not have authority over roads, and the break between public transport and roads would be very difficult at a local level. Could you elaborate on the funding of that model, given that they want to move from revenue instead of capital?
Ms Gill:
I agree with the logic in that. We see that one of the objectives of the Roads Service is to cut congestion. The target or objective of transport is to get everyone onto public transport, and we are all committed to that. Every partner is committed to making public transport work.
A real partnership approach is needed. If bus lanes or park-and-rides are needed, or roads need to be designed in a certain way to fit rapid transit into the system, there is an absolute need to be able to work between those two disciplines. The two can benefit each other with the proper working of that system, and — dare I say — perhaps even fast-track some of the discussions that have gone on, such as those with Sammy Wilson about the Larne line, where there is an issue in trying to move people together on those different elements. From that point of view, there is a certain logic to having the disciplines that will help to achieve those two objectives that are very important together. Again, it is the logic, the principles and the marketing of it as opposed to the completeness of the structure.
Mr Dallat:
I think that Jim Wells may have stolen my thunder here, but you have obviously spent a considerable amount of energy and time —
Ms Gill:
Years.
Mr Dallat:
You are as surprised as I am at the content of Catherine Mason’s presentation. If that model is the way forward, how would the whole principle and concept of partnership develop? That has been emphasised time and time again. There seems to be no indication of how the new model here in Northern Ireland relates to that in the Republic of Ireland, where there is increasing public transport. That must be developed, because the roads are choked. What confidence have you drawn from today? What should this Committee be doing to shake out what needs to be shaken out?
Ms Gill:
I am very confident. We should not underestimate how far we have come. We have signed up to principles and options to be measured and to decide what the best way forward is. We need to keep our eye on the ball as to what this is about. It is about passengers, controlled competition and integration. On examining the subject of competition, we were unhappy that some routes have been tendered out to Chambers Coach Hire on the Maiden City, Goldliner, or Coleraine lines. My problem is that there are proposals to give 10%-15% of business to the private sector. In looking at the existing routes that are being let out, about 0∙3% of the passengers have access to the more competitive routes through the letting of those subcontracts. If 15% was given to the private sector, that would cover about 1% of the travelling public. That is not competition as it is meant. We have to realise that everyone has a job to do, and we must make sure that we are getting value for money. Translink recently placed a real emphasis on achieving punctuality and reliability, and that is brilliant. However, the bit that is missing for the public is value for money. In my view, that will deliver a better-integrated system that is clearer and more transparent in cost and delivery, performance and value for money.
Mr Dallat:
In relation to the 15% that is farmed out, am I right in saying that it is not a level playing field, that people who are eligible for free transport cannot avail of all Chambers buses, and that there are other serious anomalies?
Ms Gill:
Independent operators are running on other routes, but people can use concessionary tickets for those buses only on certain journeys, and that is a real problem. We need to look at that issue. During the concessionary travel consultation, we said firmly that, although we accept that there are few resources, we need to make concessionary travel free for people to move on all services, as opposed to just Translink.
The Chairperson:
Thank you very much.
Ms Karen Magill (Federation of Passenger Transport):
Good afternoon. Representatives from Chambers Coach Hire, Logan’s Executive Travel and Airporter are with me today. Translink is also a member of our organisation. We represent public and private transport providers. I hope that my presentation will be as interesting as the others. However, a lot of information has been covered, so I will probably go over some of what has gone before.
Our organisation was set up to represent the private sector, but we quickly learned that, for transport to thrive and go forward, we needed to develop partnership with all transport providers. Therefore, we came together from very early on, and we are delighted to have been the co-architects in the whole move towards transport reform. In fact, sometimes we believe we were the catalysts for that change.
It was clear that transport in Northern Ireland needed to improve, therefore, we came together with Translink, the Consumer Council and, as Eleanor said, we met with Mr Spellar, and the stakeholder forum was born. We have spent the past three years working to move the whole thing forward. Our objectives were to give the passenger choice; to give the public value for money; to comply with the referees in Europe and the Office of Fair Trading; and to try to consider social inclusion, environmental protection and the other issues that were mentioned earlier. Therefore, we agreed a set of principles, and we decided that the way forward was to sit down and manage them together. The result of that is the current transport reform.
Doreen and Brian explained the Minister’s decision. We are here today to answer questions and to do whatever we can to reassure you about the way forward, to reassure you of our support for the three-tier model and to try to highlight its importance. We must ensure that the chosen option gives us the required power, authority and all-inclusiveness. Whether an agency, a body or a reformed NITHCo is in place, we must ensure that it has the resources to do the work, so that we do not have to beg for bus lanes, and the giant gaps in the network can be highlighted and filled.
We must have a network in which, together, we can identify gaps and fill them in a partnership that provides value for money.
Mr Dallat:
Is having Translink as a member of the Federation for Passenger Transport not like having the fox and the chickens in the same run?
Ms K Magill:
No. We have moved on a bit from that. Translink is simply a major provider of transport. I no longer regard transport services as public and private. I consider them to be transport operators working together in an effort to improve services and provide solutions. Private and public operators work together in the executive committee of my organisation and in monthly members’ meetings.
Mr Dallat:
Did Ms Mason’s presentation on behalf of Translink impress you?
Ms K Magill:
I have not seen anything other than today’s presentation. I would appreciate more time to study the proposals. It has frequently been suggested that the changes required can be made within current structures, provided that NITHCo’s function is extended.
It is not rocket science. Northern Ireland is a wee country that is around 80 miles long and 80 miles wide with 1·7 million people and more than 3,000 buses. Why can we not come together to improve the transport network? Doing that does not require a reformation of NITHCo.
To be effective, a restart must be simple, controlled and managed. The new nucleus should be a middle tier that consists of NITHCo’s existing expertise and resources; that is then developed into a body which is modern, all-inclusive and forward-looking and can take on challenges.
Mr Wells:
Translink proposes to allow competition on 10% to 15%’s of its services. Would non-Translink members of your federation take that up? Do they already do so?
Ms K Magill:
Yes, a few of them do so at the moment.
Mr Wells:
The Consumer Council has also given evidence that the overall impact on the number of passengers will not be great. Is there a disparity between the Translink figure of 15% and the Consumer Council statement that the number of passengers involved might constitute a very low percentage?
Ms K Magill:
It depends. It is 15% of what? I am an accountant by trade and I know that figures can be made to fit requirements. We are today considering a network with an uncertain potential for development. That network must first be developed before I can return to the Committee with specific recommendations, for instance that 150 new rural, marginal and high-speed services are needed across Northern Ireland.
Translink has a finite level of resources. The private sector must provide 10% to 15% of services to allow us to run the network in a manner that meets customers’ needs and the required new level of services. Therefore, it is difficult to know what 15% constitutes until the network is developed and assessed. Only then will federation members be willing to tender for services into the future.
Mr Wells:
Are there any capacity problems in taking up services that may become available?
Ms K Magill:
We must be realistic. Some private operators are poised and ready to come on board. The federation has two very large operators, six large operators, and the rest of them are medium size. Our people have shown that they are prepared to invest.
I have been in the industry for only six years. The progress made, and the investment by, the private sector are unbelievable. Those operators are poised, ready and willing to become more involved. Perhaps some of my colleagues would like to say something.
Mr Michael Lorimer (Federation of Passenger Transport):
I am chief executive of Chambers Coach Hire. This year alone, my company has invested more than £5 million in new vehicles. Chambers is a private business acquired after a statement in 2006 on the reform of public transport by the then Minister of State, David Cairns. Investors saw an opportunity to buy into companies such as Chambers to take advantage of benefits that might accrue from that reform.
The only caveat is, as Karen pointed out, that we have a population of 1∙7 million, and we need to be conscious of that.
Further west, many areas are difficult to service; I do not want to give the impression that there are queues of people ready to start offering services all over Northern Ireland. Chambers — and I am sure that the other companies can speak for themselves — stands ready to invest, but it is not a bottomless pit. As a private business, we obviously need a return on any investment that we make. At this, the early stages of discussion, we need to understand what routes are available to us. If I have a clear understanding that I can provide a quote for routes between, for example, Belfast and Coleraine or Belfast and Dungannon, then I am quite happy to invest in that. However, we need to know passenger numbers and volume. Certainly, among everybody, there is a desire to invest and to be involved in public transport, however; we are still in the dark to some extent and have little understanding of what quantum that would take.
Mr Niall McKeever (The Airporter):
Capacity does not just mean seating capacity, there is also the knowledge capacity that those individual companies in the independent coach sector can bring to try to enhance the current provision. Between 60 and 80 experienced family businesses make up the independent coach sector, all with lots of local and regional knowledge and all looking at how to make routes more profitable.
Mr Wells:
Will any additional capacity be provided entirely from those companies’ own finances? Is there no grant-aid available?
Mr McKeever:
Our own company has always been privately financed. We are a young family company and have been doing this for 12 years, and working hard at making the project work.
Mr Boylan:
Going back to the rural issue, which is vitally important regarding my own constituency, how will this model deliver social inclusion and value for money?
Ms K Magill:
Services must be properly integrated. The fleets are out there — private, public, door-to-door, community transport — and a new, all-inclusive, middle tier will look at integrating all those options to provide one type of rural service so that my wee mum, or your wee granny, living in a rural area, can get to wherever she needs to go. It is not a case of one Department with one initiative here, another Department with another initiative there; that middle agency will provide a co-ordinated and integrated approach looking at everything that has to do with transport. Northern Ireland’s people are clever people and we should be able, with the right approach, to do that.
Mr McCartney:
Did you come at this from the point of view of which model would suit the Federation of Passenger Transport or were other models examined?
Ms K Magill:
If we had looked at a model outside the private sector it would not have been anything like what is on the table today; it could not have been — it just does not work like that. The private operators will never succeed or realise their potential unless they work as part of an overall system. You cannot look at it from the private-sector point of view; there are only 100-odd legally licensed coach operators in Northern Ireland and you have got to gather the whole thing together and try to make it work for everybody.
The system has to be customer-focused; if I have no customers, there is no point in putting a service on. We have to look at what the passengers need, and then develop our network so that those passengers can go out in the morning with a choice. I would dearly love to get on a coach every morning and go to my work or meetings in Belfast, or anywhere across Northern Ireland. We need choice, flexibility, and lots more integration between providers so that, as Jim says; when customers get that Oyster card, they can go out and get from this part of the country to that without any hassle. So no, the decision was definitely not made with the private sector in mind.
I am not a private operator and never was; sometimes I get an awful lot of abuse from the private side and the public side because they feel that sometimes I am too accommodating to others — I am quite middle of the road.
I consider the issue, first, from a mother’s perspective, and, secondly, from a taxpayer’s perspective. After that, I consider the operators.
Mr McCarthy:
Have you examined the other options?
Ms K Magill:
Yes, we have examined and worked through all the other options.
The Chairperson:
Thank you very much.
Mr Peter Bunting (Irish Congress of Trade Unions):
We have provided the Committee with a written submission, which covers a number of issues.
Congress does not just represent Translink employees, but more than 220,000 public transport users in Northern Ireland. Our policy is not just to protect the jobs of those who work for Translink. Some stakeholders were delighted because none of the employees or their representatives is involved with any stakeholder group. Why does the company’s stakeholder group not represent its employees? We were excluded from the stakeholder group, so this is our first opportunity to publicly comment on the three different models proposed to effect public transport reform.
There have been viable movements in the delivery of public transport: employees have agreed to stop working under, what some may describe as, archaic terms and conditions of employment to ensure that public transport becomes more efficient and that people get value for money.
Public transport, by its very nature, is a public service. Historically, when private operators have entered the arena of public transport, they have reduced services during valley periods and on Sundays, and they have abolished, in many cases, rural services. That has been the experience in GB. Private operators admit that they have one aim — to make a profit. Where that is the case, the operator may not necessarily offer social transport services. Therefore, public transport is a public good, and it is crucial that it remains in public hands. I will return to that point at the end of my presentation.
I want to talk about the debate on EU regulations. For more than 10 years, I was general secretary of the National Bus and Rail Union in the Republic of Ireland, and, for 20 years, I was president of that union. So, I know all about public transport, EU regulations, and privatisation, which I have been fighting against for many years. Current EU regulations do not prohibit the Minister from awarding the contract to Translink, as the direct operator for services, as long as Translink proves that it is efficient, and that it is open and transparent about the contract. There is a 10-year derogation for this particular facility as well. No EU regulation compels the introduction of competition into the public transport industry.
Certainly, there is, and always will be, scope for more increased efficiency. We reject the “do nothing” option. People would be targeted as Luddites if they were to “do nothing”. That option would not give people the best value-for-money service. Public transport is evolving, and we are willing to undertake those changes.
Consequently, we would prefer an extended version of the NITHCo model.
Incidentally, like the rest of our colleagues, we did not see the Translink model, although some of our members met the company’s representatives on Monday, when it was hinted at.
We reject the agency model, because we believe that that will result in the creation of another couple of quangos. Translink already has the expertise, which is almost unique — not many people have the expertise for network design and operating in the public-transport industry. If another agency were to be created, Translink — if it is still operating, as enshrined in the documentation — will be obliged to retain its expertise. Therefore, all such expertise will have to be hired in to the middle tier. Furthermore, going down the road of controlled competition, those people will also have to hire in a degree of expertise. Consequently, there will be three groups, all of which would have to be paid for out of the public purse or through revenue from passenger fares. As people have already said, Northern Ireland is a small place, and we do not need three tiers of expertise, which does not even exist in Northern Ireland and would have to be bought in. Moreover, it has been said in the Assembly that there are sufficient quangos in Northern Ireland, and there is a desire to cut their numbers. Now, somebody proposes to introduce a few more.
Reference was made to packaging routes into viable contracts. The history of public transport shows that the introduction of such scenarios, in time, creates several small monopolies instead of the large, de facto, monopoly that we have now. Therefore, once again, that would create greater costs.
The Irish Congress of Trade Unions is puzzled by references in earlier public-transport-related documentation, which stated that Translink will be the majority operator, whereas, that role has now been downgraded to being the lead operator. We do not know what percentage — from 51% to 99% — of the operation will be retained by Translink as the lead, or majority, operator.
Even if the Committee could elicit that percentage figure from the mandarins in DRD, we will still have a problem. As recently as 25 July 2008, we received a letter from the Minister, informing us that he has made it clear that the privatisation of public transport is not on his agenda, or on that of the Executive. Around this table, we are all of average intelligence, and therefore we must realise that such a proposal will have a huge impact on staffing levels. If there is a bid to privatise services, or a tendering competition, what happens to existing staff, or to the existing fleet? No one appears to be talking about that today.
There has been much talk about regulation. However, although we regulate everything else, there has been no reference to regulating wages or employment conditions for anyone who comes into the industry. The cost of a new bus and a second-hand bus is practically the same. Therefore, the only way that there can be competition in public transport is to drive down employees’ wages and conditions, or reduce services by reducing costs. Despite all the hullabaloo about increasing this and that, the proposed changes will be detrimental to workers in the companies, because that is the only way to drive down costs in order to beat competitors. Labour costs and employees’ terms and conditions must be driven down, or services must be reduced. That stands to reason.
I shall paraphrase Professor William Brown, who was engaged to resolve a wage claim in a company operating in the London transport model. He said that the competitive model and the multitude of actors in the industry caused instability in industrial relations, because of the constant comparisons and groups trying to outjump each other.
People talk about competition in the public-transport model. However, perfect competition in public transport is impossible, due to the reasons that I have outlined. In economic theory, perfect competition is like opening a corner shop — there are no barriers to entering the market. The renowned transport economist Bill Tyson, argues that public transport is monopolistic by its nature. Therefore, what happened to the rest of the models in Europe and GB? After 1986, a large number of individual operators in GB were bought by five major international cartels. That turned those operators into oligopolies, which controlled the service, the fares and the labour. Therefore, one must be careful when talking about controlled competition, because perfect competition does not work in the public-transport industry. That view is not mine — it can be substantiated by erudite academics.
We all advocate integration. However, the fewer actors that are involved, the easier integration, for example of ticketing, is to attain — bus operators will not share their timetables, ticketing and commercial information with their competition. Therefore, the more players there are on the pitch, the more difficult integration is to attain.
Someone proposed that a company other than Translink could own the bus stations and all bus operators could use them. That would cost the Department an arm and a leg, because it would eventually become responsible for the capital investment in bus stations, whether they are in Downpatrick, Ballynahinch, Antrim or wherever. There are also staffing implications.
Last week, the Minister of Finance and Personnel said:
“ Northern Ireland’s reliance on the public sector leaves it better placed to stave off the worst effects of the current economic downturn.”
The difficulty arises when too much private competition is allowed. For example, the Stagecoach Group became the main bus operator in Copenhagen and was running between 600 and 800 buses. However, as it was not making enough profit, Stagecoach upped left in the middle of the contract and left Copenhagen denuded of any public service. Private companies will do that, but public-sector companies cannot do that.
In regard to regulation, what use has the energy regulator been? You are criticising the rise in energy prices but, if the proposals are passed, in five years’ time will you criticise the price of bus fares You are the democratically elected people in Northern Ireland, so you should be the regulators — Translink should be answerable to you, rather than a faceless and bureaucratic regulator that, to date, has failed. Although the existing system has many warts, it can be improved.
Mr Wells:
Do I detect that you are not happy with some of the proposals?
Frankly, what you suggest is as close to the do-nothing approach as possible — a little bit of tinkering round the edges, and continuing the way we are going.
Mr Bunting:
Before I reply to Jim, I want to say that we must debate at greater length the Translink model introduced today. In response to the point about controlled competition, in Dublin in Bus Éireann, I negotiated for private operators to come into the industry on the premise that it was in the interests of cutting costs for the public and the Government. On a Friday night, thousands would turn up Busáras. There were insufficient buses, but we had a policy of not turning away anyone. Therefore, we allowed in private-sector operators to lay on auxiliary services on Saturdays and Sundays for students and civil servants going home. There was no point in purchasing buses to leave them idle from Monday to Friday.
I have no problem with enhancement of the service at times with private-sector elements, so long as that is negotiated with workforce.
Mr Wells:
Your argument does not hold water. You have said that if a firm is in competition in the private sector, the only way it can drive down costs is to cut wages. However, it could increase throughput, improve quality of service and boost profit and still continue to pay its staff the same wage.
Mr Bunting:
Not with the densities of population that exist in Northern Ireland, Jim. It is impossible to do that. The Consumer Council pointed out that the biggest problem we have in running the service and meeting all the targets set out by Translink is the congestion on the roads and the lack of priority accorded public transport vehicles. That is the greatest difficulty that faces transport in Northern Ireland.
It used to be said that all the buses in Dublin were a disgrace. However, if a philanthropist were to put 1,000 extra buses onto the streets of Dublin to enhance the service, it would only increase congestion. Do you understand that line of argument? It is not even about numbers of buses; it is about the frequency, the priority measures and then one can begin to talk about enhancing the network to tempt people out of their cars. In middle-class south Dublin, Foxrock and areas like that — I know you do not know Dublin, Jim, but I will explain it to you.
[Laughter].
I will bring you down and show it to you.
Mr Wells:
No comment.
Mr Bunting:
My point is that a bus lane with a two-minute service was put right through that area, and passenger numbers soared by 141%. That proves that if a good, clean, frequent, bus service that goes straight to the city is provided, which saves on the time taken by travelling by car, passenger numbers will increase. However, that is not due to efficiency of workers or the network: it is down to the efficiency of DOE or whoever is in charge of giving sufficient road space to public transport users.
Mr Dallat:
Peter, I admire your presentation. My father could never afford to join a union. However, the question I am prompted to ask —
Mr Bunting:
Does that mean you are anti-union?
Mr Dallat:
I have been a member of a union all my working life.
Mr Bunting:
I thought your quip meant that you were anti-union.
Mr Dallat:
No. You are going down the wrong road. Before me, I have the accounts of Translink and I have looked at them carefully. Members of your union do not grab all the money: management do. How do you feel about that? There may be an opportunity here to change that.
Mr Bunting:
There are opportunities to change many aspects of Northern Ireland society to the benefit of the taxpayer — we are all taxpayers. I am not here to be critical of other workers, irrespective of the occupations involved. No matter where we work — the Assembly, a political party, a trade union or a Translink company — all of us can become more efficient: all of us can do better. That I have learned throughout my trade union life: you should never say never, and you should always be up for change and for making things more efficient.
I understand that an outline business case will be produced, but no one has yet mentioned the French model. That is relevant to your theory, John. Every five years the management is subcontracted out in particular areas of France that run public transport.
Mr Dallat:
Do you agree with that?
Mr Bunting:
Do I agree with it? All I mean is that it is up to you guys to make the decisions, but that model works in France.
Mr Dallat:
We got off on the wrong foot, because I am a trade unionist. I could have asked if you came here on the number 20 bus, but do not answer that, because I did not ask anyone else.
Mr McCartney:
Do you oppose the establishment of an agency because such a body will be a quango?
Mr Bunting:
It will be another quango, and, if such an agency were established, the necessary expertise will not be available to meet its requirements. I have my doubts about the expertise of those who claim to speak as experts on public transport. There is only a small group of experts in Northern Ireland, and they are employees of Translink, regardless of whether we accept that. If Translink is to remain the major operator, it will need to hold on to the staff with that expertise. The new agency will have to hire a new group of experts. If controlled competition is allowed, and a private company such as Chambers Coach Hire is allowed to operate and expand, that company will also need that level of expertise. As public transport is a public service, there are no great profits to be made, yet the suggestion is that the public purse, or the fares revenue, will be used to fund these particular bureaucracies, as I would call them.
Mr McCartney:
I understand what you are saying. Your objection is not because the proposed agency would be a quango, but because of the results that you have outlined.
Mr Bunting:
I also object because it will be a quango.
Mr McCartney:
If the expertise transferred from Translink to the middle tier —
Mr Bunting:
I would still say that that organisation is a quango. A range of organisations and interests will inhabit that middle tier, and it will be a major quango. The proposed middle-tier organisation will consist of the current board of NITHCo, which already exists, and an executive management, which already exists. That could be enhanced. However, I would like to debate the NITHCo model, because I may gravitate towards support for that. In relation to the middle tier, it is very simple; the model was designed by a number of stakeholders. ICTU was not represented at the stakeholders group, and I wonder if the middle-tier model was designed to suit some of those stakeholders who participated in its design. I am always conscious of the fact that, when consultants are involved in any particular issue, he who pays the piper calls the tune.
Mr G Robinson:
I find it incredible that a major body such as ICTU was not involved in any of the consultations until now. That is absolutely ridiculous.
Mr Bunting:
I worry about why we were left out of that consultation process.
The Chairperson:
Thank you.