ACTION AGAINST PRIVATE BUS MONOPOLIES

RMT helpline 0800 3763706 :: september 2009 :: RMTnews 8 The Office of Fair Trading (OFT) has called for a full inquiry into the operations of local bus services outside of London and has referred the matter to the Competition Commission. The OFT has already held an initial inquiry which uncovered evidence suggesting that there is little or no competition on local bus services outside of London and a quarter of public tenders for these routes received only one bid. The fact that a quarter of public tenders receive only one bid, indicate a potential carve up of the sector by monopoly operators namely; First-Group, Arriva, Stagecoach and Go- Ahead, who between them dominate two thirds of the market outside London. One third of local routes has one monopoly operator. Despite claims by these monopoly companies that privatisation and fragmentation of the bus services is better for the public due to lower fares through competition, the OFT report revealed that this is not the case. Operators are keen to maintain their dominance of a route and bus companies have breached competition law as a result. This creates a situation where the public have no choice but to use service at whatever fares the company charge. The report found that fares are nine per cent higher on routes where a monopoly is in place. Since privatisation, bus operators like those named above have been unwilling to provide socially necessary routes without subsidy support from local authorities. As a result these bus monopolies are subsidised to the tune of £1.2 billion by the tax payer in order to keep services available to those who live in more remote areas. Essentially, profitable routes have been given away and those routes which do not put money in the coffers of the monopolies are still paid for by the taxpayer. PUBLIC OWNERSHIP Since the privatisation of the industry by the Tory government in 1986, RMT has consistently campaigned for the return of bus services to public ownership. Various studies conducted by the union have highlighted the fact that privatisation has caused greater social exclusion, through increasing costs above inflation which disproportionately affects those without cars, lower wages and worse terms and conditions for workers in the industry. This coupled with lack of investment in the industry through the draining of its profits into the pockets of shareholders, and a lack of integration with other forms of transport has had disastrous consequences. RMT general secretary Bob Crow noted that “privateers routinely use their monopoly position effectively to blackmail local authorities into parting with more public money under the perpetual threat of the axe falling on more routes”. “ The only supposed virtue of privatisation is competition and where there is no competition, as in this case, the question must be asked as to why basic transport services are not publicly owned, democratically accountable, and run in the interests of the public. “Expecting good faith from these companies is the equivalent of expecting a jackal to refuse red meat. Their behaviour is predatory, and cannot be properly regulated,” Bob said. The Office of Fair Trading has also had “many complaints alleging predatory behaviour of incumbent firms designed to eliminate competition from new entrants”. For instance, transport magazine Transit recently reported a meeting between the chief executive of publically owned Lothian Buses, Neil Renilson, and the Scottish Parliament local government and transport committee. When asked why Lothian Buses would not expand out of Edinburgh into West Lothian, Renilson replied: “I know if I run buses from Edinburgh to Livingston or Broxburn, First will regard that as an attack and will then run buses in the city against mine. “The reality is I will not snap at [First’s] heels in case I get stood on”. The committee convenor then observed that “that does not sound like competition; it sounds like an informal cartel”. LOCAL TRANSPORT ACT RMT last year welcomed the passing of the Local Transport Act, which gives local authorities powers to regulate some local bus services, as a small step in the right direction. An RMT-inspired amendment to the Act ensured full pension protection for bus workers transferred between employers in the deregulated bus market, as well as the right for unions to be consulted if a local authority wishes to introduce franchised bus services. However, RMT still maintains that the system of competition, even with greater regulation, cannot work. Once one company has competed “successfully” against others, the likelihood of a monopoly developing is very high. Tougher competition regulations cannot solve the problem, as monopolisation often arises from competition. The union argues that the only solution for having a value for money, accountable service where staff are treated with dignity and respect is an immediate return to public ownership. “If the private sector is to be allowed to continue operating buses at all, it must be under rigid regulation, but ultimately the only way to ensure that buses play their proper role in an integrated transport network is to bring the industry back into public ownership,” Bob Crow said. ACTION AGAINST PRIVATE BUS MONOPOLIES Office of Fair Trading launch investigation against ‘informal cartels’ of private bus companies