Future of the Coach Industry

[Dr Rupa Huq in the Chair]

I beg to move,

That this House has considered the future of the coach industry.

It is a pleasure to serve under your chairmanship, Dr Huq. I record my thanks to the Backbench Business Committee and my good and honourable Friend the Member for Gateshead (Ian Mearns) for allocating time for this important debate. I thank my own trade union, Unite the union, for providing background information and briefing.

I particularly thank my constituents, Jillian Nicholson and Michael Pearson of TM Coach Travel and Northeast Coachways. The coach industry could not have two better advocates. For nine months they have asked for nothing more than fairness and justice, and a chance to survive covid, so that theirs and other small and medium-sized coach companies, often decades-old family businesses, can return to work post-covid.

The industry has a simple message to Government, and it has been delivered thousands of times in postcards from the edge. It reads, “Wish you could hear.” The Government are running out of time to listen and act. Coach operators are already going bust; employees, drivers and mechanics are being made redundant; and, the sector is losing capacity. That capacity will be vital to the recovery of the coach industry and to the whole economy, and to thousands, potentially millions, of jobs, supported by UK leisure and tourism.

Coach companies are the backbone and the supply chain for UK leisure and tourism. According to the Confederation of Passenger Transport, more than 23 million visits were made by coach in 2019, contributing £14 million to the UK tourism economy. The sector has more than 2,500 coach operators, directly employing some 42,000 people. Of course, there is then the ripple effect. Vehicle maintenance and upkeep supports an army of mechanics and garages involved in servicing and repairing vehicles.

The argument today is simple: the Government should stand by British businesses—companies that support our economy and do the right thing. The most responsible coach companies have invested in the newest clean fleets in our economy and are implementing the Government’s zero carbon climate change policy. However, ironically, they are facing the greatest loss, having to manage higher debt levels at a time when they have no income and the industry is shut down.

It is not a crisis of their own making. The number of Members of Parliament here who are concerned about this issue is worthy of note. Several who were hoping to speak have had to leave, unfortunately, because of delays to the votes and speaking in the main Chamber. This is an important issue that affects every constituency.

I put my name down for the debate, but unfortunately I was not called. Is the hon. Gentleman aware that in Northern Ireland, the Department of Enterprise, Trade and Investment has a bespoke package of grants of £8,000 paid for the first bus and £4,450 for the second, up to a total of £100,000? That underlines the importance that the Northern Ireland Assembly has put on the bus sector, including Giles Tours and Billy Brown’s and others in my constituency. Does he feel that the Northern Ireland example might be one for the Minister to replicate here?

I believe there is specific support in Scotland and Wales as well. We are calling for the Minister to act and provide some sector-specific support to the coach industry in England. We are not asking for special treatment; we are asking for parity and an equal chance for the sector to survive, with support that recognises the specific impact that covid has had on the sector.

The coach sector was the first hit, the hardest-hit, and will be the last to recover. The fall in demand and income has been absolutely catastrophic—in excess of 90%. Unlike some other industries that have had the opportunity to diversify or even continue operating during covid, the coach industry has experienced a near total shutdown. Even if venues were open, such as concert venues, shows and sporting events, or holidays were still taking place, the social distancing requirements would make such coach trips unviable.

The industry needs support and the Government excluded coach companies from the rates relief support by failing to recognise them as part of tourism, leisure and hospitality or essential travel. I expect many in the industry would agree with Jade Cooper-Greaves of Henry Cooper Coaches in Annitsford. When she was interviewed by the BBC, she said:

“I have never written a job down in my diary that wouldn’t be classed as tourism, leisure, hospitality or essential travel.”

The lack of sector-specific support is crippling and the Government are failing to recognise the scale of the crisis.

In a letter on 23 November, the Minister responsible, who sits in the other place, said:

“We continue to work closely with representatives from the coach sector, including the Confederation of Passenger Transport, and with other Government Departments to understand the ongoing, specific and unique risks and issues the sector faces and how those could be addressed.”

This is a popular debate. I think that I have counted 13 bodies, with 37 minutes available; the time for the debate has been slightly stretched, because of the earlier votes in the main Chamber. I am not proposing to have a formal time limit; if everyone sticks to two and a half minutes each, we will get everyone in.

It is a pleasure to serve under you today, Dr Huq.

I congratulate the hon. Member for Easington (Grahame Morris) on securing this debate on an issue that affects so many small businesses right across the country. In normal times, their industry is worth about £7 billion, and it is fundamentally a healthy and profitable industry. I could go down the list of all the things that it does, but I will not do so, for time’s sake.

Operators—small-scale entrepreneurs who spent years building up their businesses—are doing everything they can to stay afloat. However, bookings are not expected to return to pre-pandemic levels until the summer of 2021. Many operators face a drop in income of around 90%—for example, Jewels Tours faced a revenue shortfall of that amount. At the same time, their fixed outgoings remain the same: payments on vehicles, monthly maintenance and so on. The summer months provided some respite, but they could hardly be profitable, because of the social distancing requirements.

Those businesses have made significant investment in their infrastructure. They have high fixed costs in servicing their financial investment. For instance, over the past six years, Grange Travel has invested over £6 million in upgrading its fleet to satisfy regulatory demands. One operator applied through their bank for a coronavirus business interruption loan. Despite having an excellent credit score and the scheme being Government backed, they were declined, leading them to go to a broker and have a debenture attached to their business. As a result, they are having difficulty getting other finance. They now face a winter with hugely suppressed demand, the liability of a high fixed-cost base and little or no support outside the furlough scheme. They face going out of business. Yet this is a viable industry, which supports our own domestic hospitality and tourism sectors.

I recently had the pleasure of speaking to Roderick Thompson from Regent Travel in Hartlepool, a family-run independent travel agent with over 30 years’ experience in the travel business. He told me not only that covid-19 has impacted his business and the travel industry as a whole, but that for many of his regulars the potential demise of the coach tour industry would have a devastating effect. He told me that many of his customers prefer to pay cash and were not used to the world of computers. When holidays got cancelled due to the pandemic, he and his staff spent most of their time recovering deposits for them.

That brought into sharp focus the magnitude of the hit the coach industry is taking. The Confederation of Passenger Transport UK has warned that, without urgent support from the Government, thousands of family businesses are at risk because, despite mothballing coaches and furloughing staff, they still face costs averaging £1,900 a day.

The owners of another local family business wrote to me recently. Paul’s Travel has been operating for 18 years in the minibus trade. In their own words, they sit between taxi companies and large coach companies. They, too, have suffered similar experiences, with private hire down and the number of regular weekly contracts down from 16 to two. They also rely on the hospitality and leisure industry. They are hanging on by the skin of their teeth.

I have chosen to highlight the plight of two local Hartlepool companies, but it must be recognised that on a national scale coach travel is a major player in the leisure industry. It directly employs 42,000 people, with thousands more jobs dependent on the sector. Without Government support, those jobs will simply go.

I thank my hon. Friend the Member for Easington (Grahame Morris) for securing this debate and giving an excellent speech. The coach industry is a vital part of our society, which we take for granted. We have probably not appreciated until now its full value and its true worth to our communities and our enjoyment. For many working-class kids of my generation, the highlight of the summer holidays was a day trip to Blackpool or north Wales on what we called charas, which was our take on charabanc—a coach. Of course, they have changed a lot since then. We have all experienced it over the years.

I want to draw the attention of the House to something that people probably forget—the role that the coach industry played at the beginning of the pandemic. Given that so much has happened since, it is easy to forget that when British nationals came home from China in February and March, it was coaches that transported them from London to the Wirral. We all have coach companies, or involvement with coach companies, in our constituencies. They are very much part of the community.

My area has a number of such businesses. I have spoken recently to Anthony’s Travel, which is a local company, and to Richard Bamber, who is one of the partners there. He told me just how much they are feeling the pinch. They also feel excluded, particularly when the Government are making decisions about what sector they fall into. These local businesses form part of the backbone of our communities, but it seems that the coach industry falls into a grey area between the transport and leisure sectors, and no one in Government seems to be brave enough to make a decision when it comes to defining it.

As my hon. Friend the Member for Easington mentioned, the Government have just tried to ignore the points and arguments that are continually being put across. They then try to cover that by saying, “We are helping industry. We are providing support.” But they will not answer the actual points, and they need to do that. It is about time that they came clean and said what they are doing and what they intend to do.

I thank the hon. Member for Easington (Grahame Morris). I agree with everything he said—that avoids some degree of repetition.

I want to talk about the impact on the sector in my own constituency. Every July, coach drivers from across the country travel to Blackpool for the coach driver of the year awards, parking their luxury vehicles on the comedy carpet outside the tower. This year, they could not do that. Instead they came as part of a blockade along the M55 for the Honk for Hope campaign.

This is not about one single bus company in my constituency—although Members are right to support companies in their areas. It is about the existential threat to the private sector economy in my constituency. If people travel the Blackpool coast from south to north, they pass hotel after hotel after hotel, each of which depends on coach visitors coming to the resort. Those hotels have seen their business collapse: there were 80% fewer bookings even before the most recent lockdown, and they are now at crisis levels. I know of one coach company that brings 120,000 people a year to Blackpool, putting £30 million into the local economy. That is replicated up and down the coast. I have had hotel after hotel after hotel coming to me and saying, “We don’t know how we are possibly going to survive.”

This is not just a summer-only phenomenon; it is a year-round part of our local economy. We have the tinsel and turkey season right now, but it simply is not happening, because the hotels are closed. Even if the hotels were open, the coaches could not come, because they cannot make a profit, as a result of the social distancing rules that are part and parcel of what has to happen at the moment. We have just missed the illuminations season, which is three weeks solid—particularly in the half-term—of coaches coming in, driving through the lights and, yet again, putting money into not just local hotels but the small cafés, the restaurants, the entertainment venues and the piers. Every single part of our private sector economy in Blackpool is affected not just by the loss of visitors, but by the loss of the coach visitors, who underpin it and have done for decades. As the hon. Member for Halton (Derek Twigg) pointed out, they are part of what Blackpool is.

It is a pleasure to serve under your chairship, Dr Huq. I am grateful to my hon. Friend the Member for Easington (Grahame Morris) for securing this debate and for the really strong case that he made. Coach companies, operators and staff up and down the country will be relieved to hear their concerns played out so strongly. Two companies—Skills and Hammonds—are in my constituency; I have worked with them throughout the pandemic, and I hope to be a voice for them here today.

The coach industry is worth £14 billion to the tourism industry. Some 600,000 children regularly rely on a coach to get them to and from school. During the pandemic, the coach industry has stepped up to provide 50,000 more spaces to make sure that travel can be done safely. It is not a question of whether we can afford to support the coach industry, but what support we can get to it and how quickly we can do that. Some of the schemes the Government have done so well during the pandemic simply have not fitted the coach industry. It is hard to do these things, but there is an obligation to fill the gap. We must understand that the coach industry is distinct from the bus industry, and the support must be distinct too. I know that Scotland has announced support recently, as has Wales, and it is now time for England to do the same. [Interruption.] The fact that Northern Ireland has also announced support is news to me.

Coach businesses have big overheads. Fleet insurance, liability insurance and rent can be more than five grand a month before companies have even thought about vehicles or maintenance. Despite being such an integral part of the tourism sector, these businesses have been unable to access support packages. For example, local authorities have decided on a case-by-case basis whether coach operators ought to fall within the leisure and tourism elements of support. We need formal recognition from the Government that coach operators are clearly part of the leisure and tourism sector, so that they can consistently get the support that is supposed to be there for them and so that we can end the postcode lottery. As colleagues have said, the Government could also, at a minimum, encourage the extension of finance holidays by another year to ensure that no coaches are repossessed over this winter. The point about underwriting loans was very well made too.

Golden Boy Coaches in my constituency is a family business. It has been run not for decades but for generations. The owners have never darkened my door before. They have got on with their lives and grown their business. They have provided services to generations of my constituents. Such businesses are part of our communities, as we have heard so eloquently from many other speakers. Now they face a lifetime’s work—generations’ work—going under because high maintenance levels, high debt levels and the high costs of compliance do not sit easily with no customers. No business sits easily with high fixed costs.

We have to get the economy moving again. Coach providers do the school run in the morning and in the evening, and the only reason that those two activities paid was because the providers did things in between. After the school run in the morning, they did trips to matineés and racecourses, and after the evening school run they went to the theatres and restaurants. These companies are absolutely on their knees. Golden Boy has a future, but that future does not look rosy. It could be a very small future without more Government intervention.

We in this place are excellent at spending money—we are brilliant at it. We are great at borrowing it; the Chancellor is fantastic at borrowing it, and we are really good at spending it for him, but we do not want to spend money that has already been spent. Money was spent on giving rate relief to the supermarkets, but well over £1 billion of it has come back. As far as the Chancellor was concerned, it had gone out of the door. He has got it back, but he did not expect to see it back, so I say to the Minister: can we not use some of that money—that £1 billion—to throw a lifeline to coach companies?

As I said at the start of my very brief speech, coach operators are the people we never heard from, who got on with their businesses, built their businesses and employed our constituents. They never troubled us, and now they need us, so we need to be there for them.