Memorandum by Graham Stringer Esq, MP
BUSES AND THE TRANSPORT WHITE PAPER
It is worth summarising the characteristics
of what is left of the bus industry in this country after deregulation
in 1985 and privatisation before coming to any conclusions.
1. Ninety-five per cent of buses( and similar
amount of depots, etc.) are owned privately. There are three substantial
bus companies in public ownership, Lothian, Nottingham and Cardiff
plus 14 smaller ones.
2. Since deregulation in 1985 national subsidy
has reduced by approximately 70 per cent (90 per cent in London).
3. Passenger journeys have dropped by one-fifth
nationally (increased by nearly 10 per cent in London).
4. British Bus Body Building industry almost
wiped out in early 1990s. Only Alexanders (supplier to Stagecoach)
and Northern Counties (public subsidy) survived.
5. London has a regulated system where routes
6. PTA/PTEs exist in the six metropolitan county
areas in Englandthe Government intends to keep them.
7. Many rural areas had no bus service or next
to no service until the recent Rural Transport Grant was introduced.
8. Fares have risen by a quarter in real terms
across the country and by over a half in metropolitan areas.
9. Bus miles have increased by 30 per cent.
10. Large groups grew up on the back of buying
out smaller operators (usually ex NBC or municipal) asset stripping,
reducing wages and conditions, etc. They are now having to raise
wages because of acute driver shortagesthis translates
into higher fares.
11. These groups are now investing in new vehiclesbut
this is only beginning to work off the backlog of the 1986-94
12. Major groups have diversified into rail
operationcreating potential inter-modal monopolies.
13. Creation of stability in the market has
led to investment but the monopolies being created lead to:
(i) Marginal services run to keep competition
at bay withdrawn throwing more onto public subsidy where available.
(ii) Price of subsidised service rises (over
the last two years by about a fifth).
(iii) Fares increases still surpassing inflation
14. Through-ticketing in many areas more apparent
than real. Individual operators price to undercut multi-modal
ticket to increase market share.
15. Large companies grown up on the back of
continually purchasing other companies. In many cases ratio of
loan debt to equity is serious although decreasing as they use
monopoly position to bolster profits. Bus companies looking to
buy airports and rail companies. Inherently unstable situation.
City confidence might not last.
16. In some Cities the situation has gone so
far that on the basis of emissions per passenger kilometre, car
is dirtier than bus, except for carbon monoxide.
17. Other points which need to be made:
(i) White Paper is creating a policy climate
in which bus patronage will increase. This extra revenue will
go straight to the "bottom line" of the operators. Because
competition has been all but eliminated there will be no pressure
on operators to plough this back into more services on higher
(ii) Increase in fuel duty rebate goes straight
to profit, no public transport or fare benefit.
(iii) At the same time increasing market
power of the groups means that costs of providing subsidised services
to the public sector is increasing rapidly. Decline in the number
of bidders and increase in cost is circumstantial evidence of
(iv) In these circumstances an economic regulator
to control the actions of bus operators is needed to ensure:
that there is an equitable return
to the public sector from its investment in bus priority, infrastructure,
that the rate of return to bus company
shareholders is related to investment by the companies in assets
that fares do not rise faster than
that competition can be restricted
equitably where a Quality Partnership exists.
18. It is clear from the above that the bus
industry is in the grip of private sector monopolies who are not
accountable to the public sector but who attract major public
subsidy to Metropolitan areas.
19. One solution to the problem would be to
take the majority of buses back into public ownership; municipal
and/or national. The argument that John Prescott put to the Labour
Party Conference about why we should not re-nationalise the railways
apply; large expenditure small benefit. This can then be ruled
out although public money will have to be increased if buses are
to play their part in an integrated transport system.
20. The bus operator trade association, the
Confederation of Passenger Transport (CPT), are wholly opposed
to re-regulation. They prefer "quality partnerships"
with the local authority to provide high-quality buses, bus priority
schemes, electronic information indictors, guided bus, etc. These
can be good where they operate but not whole solution. They are
voluntary, raise competition issues and do not, under current
legislation, stop cowboy operators using facilities and downgrading
21. White Paper advocates restraint measures
particularly in Cities i.e., congestion charging and non-domestic
parking charging and car prohibitions. Again, could be useful
if local circumstances are right. But in cases where there is
major competition to City Centres from out-of-town shopping centres
people with cars will choose to drive to out-of-town locations,
pollution increases and economy declines.
The White Paper also leaves this power to individual
local authoritiesin Greater Manchester for example, not
likely to be attractive to all of the Authorities unless all of
them participate. Even if they do have a problem with developments
in adjacent shiresCheshire, Lancashire, etc. Imperative
there is a strong lead from Government.
22. The most successful bus system over the
last ten years has been London. Can this be replicated? This would
be difficult but not impossible. London was never deregulated.
In most parts of the country particularly with the Cities monopolies
control not only the buses but the infrastructure engineering
This would make competition for routes less
likely in a franchised system. Franchising is also initially expensive
to administer. It could also be done on an area basis.
Benefits from re-regulation likely to be large
if London system replicated.
23. One way of bringing some stability into
the system is to change the period of registration. At present
any service can be started or withdrawn by giving 42 days notice
to the Traffic Commissioner.
Regulations could be changed that meant registration
could only be made and withdrawn twice a year. This would achieve
service stability and stop larger operators forcing small bus
operators into bankruptcy or off the road by predatory pricing
over short time spans.
24. The chaos left behind by the Tories is not
going to be sorted out overnight. Three strategies:
(i) encourage high quality partnerships that
improve information, waiting environment, bus quality and priority,
(ii) use powers that Secretary of State has
to stabilise services by synchronising and lengthening periods
of registration to six months;
(iii) Competition Act empowers the Government
to grant block exemptions to competition legislation where deemed
in the public interest. Aim to introduce pilot projects of regulated
system on London or other regulated system basis. Create a regulator
to control monopoly activities on competition and pricingmust
have power to intervene on through-ticketing otherwise White Paper
25. It should be recognised that there is some
evidence that people will only come back to public transport if
comparatively expensive LRT systems are introduced. Even without
LRT there is unlikely to be much real improvement without more
money possibly by dedicating increased fuel levy into public transport.
It would be a mistake to increase fuel dutiy rebate to bus companies
unlikely to result in direct and commensurate benefits given to
their financial situation. System of concessionary fares needs
to be examined as it operates as network subsidy and gives perverse
incentive to increase fares.