Competition Act 1998 (Coronavirus) (Public Policy Exclusions) (Revocations) Order 2021

Motion to Regret

Moved by

To move that this House regrets that the Competition Act 1998 (Coronavirus) (Public Policy Exclusions) (Revocations) Order 2021 (SI 2021/773), in respect of the Competition Act 1998 (Solent Maritime Crossings) (Coronavirus) (Public Policy Exclusion) Order 2020, (1) removes any COVID-19 related collaboration for lifeline services on the Solent ferry routes, (2) does not provide a greater incentive for operators to compete to the benefit of passengers and freight customers, and (3) does not provide a continuing overview of competition issues by the Competition Commission on these routes.

My Lords, I decided to put down this Motion to Regret because it provides an opportunity for us to discuss the role of competition in ferry services. Does it incentivise operators to compete? Can they compete? Is there a role for the competition commission or some other body, because there is also a problem of a lack of transparency? This regulation relates to the competition exclusion for the Isle of Wight ferries during the Covid epidemic. That has now been, quite rightly, removed, but many of us can wonder what the difference is between when the regulation was in force and now, when it is not. I want to address my remarks both to the Isle of Wight services and to the Isles of Scilly services, and I declare an interest, as I live there.

The ferries kept going during the Covid-19 restrictions, thanks to grants from the Government to make up for the lack of passengers. I think they are all very grateful for that. For the ferry routes to these two islands, the total grant was about £10 million, but we do not know which company received it and what it did with it. They were not allowed to compete with each other on the Isle of Wight, while they now are, but I again question what changes have occurred since they were allowed to compete. Does competition, therefore, work in the ferry sector to give customers, passengers and freight a reasonable service at affordable prices? It is quite important for the people who live on these islands. Do they ever really compete, or is something else required to look after the customers’ interests?

We do not know whether the companies make excessive profits, but there is quite a lot of evidence that some of them fail in providing lifeline services for those who need urgent transport, particularly for the NHS. It is true to say that successive Governments have recognised the particular difficulties caused to both businesses and social services, as well as to education services, by barriers imposed on these communities. It is not, perhaps, surprising that schools on the Isle of Wight have long been at the bottom of the league table, with Ofsted constantly imploring improvements. There is no reason why it should be that way, but apparently it is.

My Lords, I start by thanking the noble Lord, Lord Berkeley, for tabling this Motion to Regret. I agree with almost everything he said. Of course, there are contrasting models in operation for ferry services around the UK, from market-based models to very much more subsidised models. Those complaining about the Solent services often look to other services for comparison, but the problem is that no two islands are really the same. People are searching for a model which provides the guarantee of service that the isolation of many UK islands requires but also an incentive for efficiency.

To look at a comparison of the islands, let us take Lewis off the west coast of Scotland as an example. Lewis is 130 miles off the mainland. It is about 350 miles from Edinburgh and about 600 miles from London. In contrast, the Isle of Wight is only 14 miles from Portsmouth and there is a ferry service which takes only 45 minutes. There is no regular air service, but there does not need to be one because of the short distances. The Isles of Scilly, whose service I know relatively well, are 35 miles off the coast. There is a sea crossing which is only for those with strong nerves and a strong stomach. It takes nearly three hours on what is a very elderly boat. I was therefore delighted to hear that there is funding to help deal with this situation. In reality, people go backwards and forwards to the Isle of Wight on a daily basis as commuters. You are not a daily commuter on a regular basis on the “Scillonian”, but of course people do go back and forth in a day to take up medical appointments. The vast majority of medical services are provided on the mainland.

We need a nuanced approach. Even in good times, islanders in general across the UK complain about their connectivity. There is, and rightly so, an emphasis on the importance of lifeline services. The SI to which this Motion to Regret relates suspended some elements of the Competition Act in relation to the Solent ferry services. There are three companies involved—one hovercraft service and two ferry services—so there is an element of competition. However, of course, during the pandemic they were apparently down to 10% of the normal passenger numbers and obviously it was not commercially viable. Yet it was obvious that essential services had to continue—freight as well as lifeline services—in terms of life-saving services.

Can the Minister answer some specific questions about this £10 million? What was it given for, who was it given to, and what guarantees do the Government have that that money was well spent? Local MPs have complained about the cost of services and about their availability for health appointments, for example. Two Conservative MPs have complained about this, saying that because the two ferry services are owned by financial institutions, they are not operating in the interests of local people.

The noble Lord, Lord Berkeley, referred to the 2009 review, which apparently showed that prices were largely competitive in comparison with prices for similar distances and services in Europe. The pricing system that is offered is very similar to that used on the railways. I agree with the noble Lord that it is not regulated, but it is the same structure as we have on the railways. If you are a commuter going at the most popular times, you pay a lot more than if you are going in the middle of the day or late in the evening, for example, when services are not popular. The same structure is used on the airlines as well. Therefore, it is not an unusual structure in transport in our country.

There was a petition in 2018; the Government contrasted the Isle of Wight with Scotland and the Scottish islands, and made the point that there was a very much lower population density in Scotland and that there was no evidence of market failure.

Finally, in answer to recent questions from local MPs and politicians, the Government have sought to suggest that the local authority should shoulder responsibility for ensuring that services are reasonably priced. I will say two things to that. First, local authorities have no power to do that, and secondly, they do not have the money at the moment. The local ferry operators say that they are proud of the special prices they provide for many local people and for people travelling to health appointments. My response to them is that they probably need to do a great deal more if they are to continue in their situation, because there is talk of a new operator to be set up, run by a local consortium.

In the meantime, I understand why the Government are not pursuing this SI in the future—because they believe that the pandemic is over—but, by doing this, they have clearly avoided a solution to an issue which local politicians, and in particular local residents, are very concerned about.

My Lords, what a privilege it is to have the noble Lord, Lord Callanan, with us this evening. With COP 26 happening in Glasgow, the Minister for Energy Efficiency, Fuel Poverty and Clean Heat is among us. In fact, maybe I should apologise that we have detained him from saving the planet. I hope that he will be able to give us a brief insight into COP 26 and his role in it in his answer to the very good questions asked by noble Lords and my noble friend Lady Randerson.

What I thought was more of an irony about this order is that it mentions the Competition Act 1998 (Groceries) (Public Policy Exclusion) Order 2020, whose time has, I think, already expired. The irony is that the thing which the groceries order was set up for—Brexit and Covid—was not a problem at the time, but now we actually have a crisis. A number of the supermarket shelves are empty, we do not have HGV drivers and supply chains are failing, so maybe we should look at that. We have now allowed cabotage, and drivers’ hours have been extended. It is mentioned here that we have more of an emergency, particularly perhaps as we approach Christmas, than we would do otherwise.

I want to say a couple of things about the Isles of Scilly—not the Scilly Isles, as they are very different places, one fictional and one real. First, I want to thank the Government for the £48 million that has been attributed through the levelling-up fund, as mentioned by the noble Lord, Lord Berkeley, to sorting out the next generation of vessels and the port structures that support them for travel between Penzance, which I visited over the weekend, and the Isles of Scilly—and between those islands as well. That very important commitment allows a change from the current “Scillonian” and freight vessel, which are well out of date and will cause problems into the future. I do not dispute in any way the questioning of the noble Lord, Lord Berkeley. He knows far more about ferry configurations than I would, but we should note specifically and positively the Budget Statement in that area.

My Lords, first, I thank my noble friend Lord Berkeley for securing today’s debate via his Motion of Regret, which clearly comes from a good place—designed, as it is, to protect consumers from high prices and to keep ferry routes accessible to all. The debate has generated more heat than I expected, but it is important because in our communities at the periphery, there is a strong sense that they suffer from high prices, are forgotten because they are at the end of the line, and get left out in government considerations. I join my noble friend Lord Berkeley, the noble Lord, Lord Teverson, and the noble Baroness, Lady Randerson, in thanking the Government on behalf of the Isles of Scilly for their £48 million contribution to improving the quality of the sea services to those islands, because what is there at the moment is clearly not fit for purpose and needs to be improved. It is a lifeline service and helps the tourist economy of those islands.

As we heard, in March 2020, the Government announced that ferry services to and from the Isle of Wight were at significant risk of disruption due to the pandemic, so they introduced regulations which allowed the two ferry operators to share information and staff to ensure that ferries continued to run regularly across the Solent. That was for all the reasons and purposes that noble Lords have outlined: for economic, health, education and welfare reasons.

Now, of course, the Government have decided that the Covid pandemic is at an end and seem to think it is the right time to end the suspension of competition law, believing it is no longer needed. I do not know that the pandemic is at an end: the figures tell us otherwise. People are getting Covid at the rate of about 40,000 a day, and about 1,000 people a week are dying from it, so I am not sure that we are at the end of it. People are still very cautious in their travel plans for that very reason. The absence of people travelling means that those services could be under threat in future. I do not buy the line that there is no more threat of severe disruption to the Isle of Wight ferry crossing services.

My Lords, I thank all those who have contributed to the debate. I especially thank the noble Lord, Lord Bassam, who came along to discuss the subject I thought we were coming here to debate: the revocation of the SI.

As I listened to the speeches of the noble Lord, Lord Berkeley, and the noble Baroness, Lady Randerson, I thought there was a sense of déjà vu about them, and of course there was. Perhaps the noble Lord and the noble Baroness will remember that we actually discussed this subject in 2017, when I had the privilege of being a transport Minister: we had a take note debate on remote island communities in England. I hope the noble Lord refreshed his speech before he made it again; I have not looked it up to see whether he has made the same one. So we have been here before and discussed the topic, and I gently suggest to the noble Lord that if he wants to have a debate about ferry services and their role in transport policy, perhaps he might want to go through the channels that would secure that properly rather than trying to shoehorn it into a debate on competition policy and the revocation of a particular SI. I will be very happy to explain to him the subject of his regret Motion—that is, why we revoked the SI. If other noble Lords are not interested in that, at least the noble Lord, Lord Bassam, will be.

I thank the noble Lord, Lord Teverson, for his concern for my welfare and my brief. I can tell the noble Lord that I will be travelling up to COP. In fact, I suppose I should be grateful to the noble Lord, Lord Berkeley, for detaining me in the House today; looking at some of the transport issues that have occurred to people travelling up to COP in the last two days, maybe I was better off staying here after all. I will be going for the buildings day next week.

To respond to the subject of the debate—I will come to some of the points made by the noble Lord, Lord Berkeley, later—last year, in response to the unprecedented challenge posed by the coronavirus pandemic, the Government responded with unprecedented rapidity to support businesses and people, and to enable a co-ordinated response to coronavirus. As part of the Government’s action, six public policy exclusion orders were made. These orders were intended to disapply elements of UK competition law temporarily in order to help businesses co-ordinate specific activities in certain sectors, and to support lifeline services during a period of disruption related to coronavirus. The Solent maritime crossings order was one such measure.

My Lords, I am very grateful to all noble Lords who have taken part in this short debate—the noble Baroness, Lady Randerson, the noble Lord, Lord Teverson, and my noble friend Lord Bassam—and of course to the Minister for his response. I do not regret tabling this Motion because, as the Minister said, it is four years since we last debated the order and quite a few things have happened since then, including Covid. I certainly want to put on the record the thanks of people I have spoken to on both islands for the grant the Government gave to keep the services going during Covid—otherwise they would have stopped; they had very little income because there were no passengers.

The noble Lord, Lord Teverson, mentioned that the Covid problems are still here and asked whether it was too soon. I can inform him that twice in the last six months there has been a week’s shortage of meat for people to eat on the Isles of Scilly. Whether that is due to Covid, transport or whatever we can debate.

I agree with the Minister that it is time to have this particular order withdrawn, but the concerns of residents and businesses on these islands will not go away. It is something that will need further thought, but it is good to know that the competition is still around, and that we can talk to the CMA if we want to and see where it goes. Again, I am very grateful to all noble Lords who have spoken in this very short debate and beg leave to withdraw my motion.

Motion withdrawn.

Sitting suspended.