Memorandum by Plymouth City Council (IT
BUS ASPECTS OF TRANSPORT WHITE PAPER
1. A reprint of an article from Transport Reviews
of July 1998 is attached
It starts from the premise that the bus market (in most places)
is in the post competitive phase. The White Paper does not seem
to start from this position.
2. The paper notes the major "push"
and "pull" variables of bus use, all of which are mentioned
in the White Paper but with little detailed or timed means of
delivering changes to these variables.
3. The FDR increase is untargeted, as there
is no means of ensuring that it does not leak into extra profit.
We are not anti-profit. Profit is needed to, among other things,
reinvest in vehicles. However, the unregulated market which is
now a series of local monopolies and comfortable duopolies can
seek to maximise profit without maximising passengers. The objectives
of the White Paper will not automatically be delivered by the
large group operators pursuing their profit objective.
4. The White Paper touches on the issue of public
transport fares at many points. The consultation paper before
the White Paper stated that there was a 22 per cent real increase
in fares since deregulation.
(4.118) the price signals to be correct
(5.22) discounted fares in Green Staff Travel
(3.51) Tickets which are easy to get, offer
value for money, flexibility and make changing easy can encourage
more people to use public transport
(3.52) no obligation on bus operators to
have "through tickets". Wish to see more "travelcard"
(3.54) Outside London fare structures complex.
Time wasted at bus stops. Pay twice if change bus
(3.55) Local powers proposed to ensure operators
participate in multi-operator tickets, but silent on timing and
(4.17) Rail fares regulated to RPI minus
1 per cent but complex fares structures and no national framework
(4.18) "absence of controls" on
rail fares regretted
(4.81) Social Exclusion of pensioners to
be reduced by national minimum 50 per cent concession scheme.
This will need legislation and local authorities will still be
able to offer more generous schemes. The City Councils scheme
is more generous. The scheme for over 80s is 100 per cent discount,
for poorer pensioners 71.6 per cent and other pensioners 64 per
cent. However the flat fare scheme for "other" pensioners
on the lowest fare (shortest journeys) return and single drops
below 50 per cent. It is necessary to ensure that legislation
does not frustrate flat fare schemes offering over 50 per cent
(4.82) needs of "less well off"
recognised in relation to bus fares. Voluntary examples of discounted
fares for people on welfare to work schemes welcomed. Local authorities
urged to "negotiate" such deals. Plymouth Citybus and
Western National offer child fares to people on New Deal.
(3.53) Local Transport Plans should consider
arrangements for through ticketing, travelcards and joint operation
tickets. Powers will be forthcoming to require operator participation,
but how is revenue to be shared, if no agreement between operators.
5. The White Paper clearly sees fares as a key
issue. However, it fails to address a solution in detail. The
two operators in Plymouth used to have the same fares and increase
them at the same time each year, even after the bus war in 1988,
when they stopped joint operator tickets. Between 1986 and 1988
they accepted each others tickets. Now they have different fares
and one operator increases fares in July, the other December.
Determining revenue sharing issues for the joint operator tickets
in this scenario will be very difficult. The municipally owned
operator with lower fares has the same cost environment and a
modern fleet but accepts lower profits. If the dearer operator
demands a pro rata higher revenue share than passenger
numbers suggest, because they have higher base fares, why should
the operator responding to the public interest help boost their
6. The White Paper accepts regulation of rail
fares but sees it as inadequate. It accepts the need for lower
bus fares for pensioners, the less well off and in Green Staff
Travel Plans. However, it does not discuss bus fare regulation,
even against the large profits of group operators. This may frustrate
the White Paper's wishes in relation to Travelcards, etc. The
White Paper is silent on how revenue sharing would be managed
in the Plymouth scenario described above.
7. Buses are the workhorse (3.13) of
public transport and are the main answer to improved public transport
to offer cost effective choice to car drivers.
8. Quality Partnerships (3.16) are applauded.
The original Chartered Institute of Transport (CIT) version of
QPs saw agreement on fares and service level (as well as quality
vehicles) being traded for protection from competition. The Confederation
of Passenger Transport (CPT) version includes no reference to
fares or service level, neither does it seek protection from competition.
Large group operators (the backbone of CPT) no longer fear competition
from their local monopolies and stable duopolies and will not
accept restraint on profit. The White Paper's endorsement of QPs
leaves many questions unanswered.
9. QPs are to be put on a statutory basis (3.17)
but the White Paper does not state that the key determinants of
the attractiveness of bus travel, fares and service level will
be part of a QP.
10. If QPs are insufficient (3.20) Quality
Contracts (QCs) can be sought. These will need primary legislation
but will deliver protection from competition whilst running services
to a local authority's service specification and performance targets.
No mention is made of fares in QCs.
11. Funding of bus services is addressed at
4.78 to 4.80. Additional passengers delivered via
QPs will produce fares revenue very helpful in funding services,
new vehicles, etc. Extra passengers will then be delivered by
local authority funds for bus priority, etc., and political pain
of parking charges, etc. This revenue will also boost operators
profit as well as fund better services.
12. The table below shows how outside London
operators have taken larger profit from a shrinking market compared
to inside London where passengers and society benefit from lower
costs. Local authorities need extra revenue from extra passengers
to invest in further bus priority measures, etc. The "nett"
line in the table represent changes to operators profit. These
profits are needed to invest in bus infrastructure. Given restraint
on public expenditure, the need to look for funding sources is
|Financial effects on operators of deregulation outside London and tendering|
in London comparing 1993-94 to 1985-86 at 1987-88 prices (in £ million)
|Change in revenue||21
|Cost of additional bus kms||-76
|Change in subsidy||-104
|Source: DoT (1994); CSO 1994.|
13. Publicly owned companies like Plymouth Citybus reinvest
in the City via dividend from extra revenue generated by City
Council policies and spending. Western National take larger profits
and remove them from the City. Effectively Citybus dividends are
helping pay Western National route subsidies and concession fares
payments to supplement a profit level twice as high as Citybus.
If ownership is not on the agenda, the use of profit should be.
14. There is a general issue of lack of competition suggesting
a need for some level of regulation. The Select Committee have
noted increases in tender prices in London as the average number
of bids has dropped from 6 to 2 per contract between 1995 and
1996. The Select Committee also noted that 92.8 per cent of contracts
are now run by the six major bus groups.
15. Section 8 of the attached sets out suggested attributes
required and roles of partners in a future integrated and sustainable
bus market. The Committee may care to set out its own "test
template" against which to judge the White Paper on bus issues.
Attached (Annex A) is our appraisal of the White Paper against
the criteria set in the paper. The White Paper does not address
many issues and lacks detail on others.
16. Hopefully the Committee could be provided with he Conclusions
(Section 10) of the paper. 10.1 looks at the state of the bus
market and compared to the rail market finds:
different approach in the passenger market on
service and fare regulation;
marginal cost equalisation for rail freight using
positive feedback e.g., higher lorry fuel duty and targeted TAG/FFG
rather than untargeted FDR.
10.6 attempts a definition of "Integration". "Integration
cannot just be a buzz word or merely co-ordination of interchange.
Each element of the package has to be delivered, each element
has to be compatible, each partner has to have a defined role
and not be able to frustrate the overall objective. If the government
deliver higher rates of FDR to operators against higher fuel duty
and local government provide bus priority measures or dearer parking,
these measures have to produce more bus passengers not more bus
operator profit. The appropriate framework of legislation and
operation has to be in place".
On this definition of "integration" the White Paper
has a number of loose ends.
Not printed (Transport Reviews; Vol. 18 No. 3, 199-213). Back