Building a world-class bus system for Britain
Buses are a life-line for millions, providing access to employment, education and training, public services and leisure activities. But instead of a world-class bus service, bus deregulation has delivered higher fares and worsening services resulting in a drop in usage. The government’s austerity agenda is also contributing to worsening access across the country.
Worsening services under deregulation combined with cuts will inevitably impact on certain groups. The National Transport Survey: England 2014, shows that women of all ages make more bus trips than men, and also that 17-20 year-olds make more trips by bus than any other age group. Nearly one third of those 60 years or over report using the bus at least once or twice a week, and for lower income households the distance travelled by bus is higher. Campaign for Better Transport (2015) estimates that 63 per cent of local authorities in England and Wales have cut funding for bus services since 2010, and 44 per cent have removed or withdrawn services.
A new report, Building a world-class bus system for Britain, by Transport for Quality of Life, illustrates the failures of bus deregulation since the mid-1980’s and makes a compelling case for fundamental reform of the bus system through franchising and municipal bus operations. The report is a timely addition to the debate, with the government due to publish its Buses Bill in the coming months.
According to Building a world-class bus system for Britain in the year following bus deregulation there was a 13 per cent fall in bus use in big cities outside of London. Bus trips halved from approximately two billion to one billion now. Similarly, most non-metropolitan areas saw a decline in usage. Deregulation makes it more difficult for there to be a comprehensive network of bus routes, simple area-wide fares, coordination of time-tables and services, and easy to find information. Bus companies can cherry-pick the most profitable services at present, leaving local authorities to fill in the gaps, and those authorities that wish to bring in more affordable fares have no way to do so under the current system. Deregulation also threatens the concessionary fare scheme for older and younger people because local authorities cannot control the level of payments they make to operators.
The report highlights that our privatised and deregulated bus system can only work if bus companies are able to make a profit. Bus companies in big cities other than London made average profits of over 8 per cent of turnover, and in non-metropolitan areas the figure was 6 per cent. However, in London where bus services are regulated, average profit levels were less than 4 per cent. Public money accounts for over 40 per cent of bus operator revenues. Across Britain, bus companies’ average operating profit was £297m per year in the ten years to 2013. Almost all of this, £277m per year on average, was paid out in shareholder dividends – resulting in a total ‘leakage’ of £2.8bn from our bus industry. In terms of public subsidy, the research shows that of the £2.4bn paid to bus companies in 2013/14, less than half given towards filling gaps in services (£1bn) had conditions attached specifying the services required.
With new franchising powers under the Buses Bill, local authorities would be able to set some or all of the fares and ticketing structures, specify a broad network or all elements of it, and could determine the timetable and service standards, for example.
Analysis by Transport for Quality of Life shows that if the rest of Britain had the same powers over local bus services as London – this would immediately generate enough savings to restore the cuts to bus services caused by austerity. Financial gains of approximately £340m would be made by retaining excess profits, efficiencies in the provision of currently tendered services, and from the bidding costs of commercial operators, for example. This could restore the estimated £76m in cuts to local authority support for buses since 2010, and the £113m in cuts to the Bus Service Operators Grant (BSOG – for fuel duty reimbursement).
The TUC would want to see franchising available to all local authorities, not just those areas where there is an elected Mayor. But an important part of making franchising work is strong industrial relations, and staff transferring between companies should have minimum disruption and no worse pay, terms and conditions. Pension protections and the application of TUPE as a minimum would be expected to protect employees when franchises change hands.
On reforms, Transport for Quality of Life also states:
“The report’s findings show here is a strong case to develop a whole new generation of not-for-dividend publicly owned bus companies that run all the services within their areas of operation.”
In other European countries, it is the norm for towns and cities to own the local buses and operate the services and these can be better than London’s franchising system, the report states. Municipal transport companies are the main providers of public transport in most German and Austrian cities. In Germany 88 per cent of all trips on local public transport including bus, tram and local trains, are on services provided by publicly owned operators. In Britain, 12 towns and cities have municipal bus companies and some are able to provide a fuller network than commercial operators, because they reinvest all profits back into the services. Reading Buses, a municipal, can invest an additional £3m per year in the network, because it does not pay any dividends.
Transport for Quality of Life estimates that changing to municipal bus operation throughout Britain would generate over £506m per year, and this would enable restoration of services cut under austerity and fund investment in new services. This would help transform bus services.
Building a world-class bus system for Britain makes a series of recommendations ahead of publication of the Buses Bill including:
- Duties on local transport authorities to improve and increase local bus use
- Powers for local transport authorities to re-regulate buses
- The scale of efficiency savings available from franchising
- Efficient and fair industrial relations
- Powers to create a new generation of municipal bus operators