Examination of Witnesses (Questions 120-139)
MR EDWARD
CHORLTON, MR
TONY CROSS
AND MR
BRIAN WELCH
WEDNESDAY 8 MAY 2002
120. Did you ask them what the rate of return
was?
(Mr Welch) Yes, and they said they were looking for
15 per cent in areas where they believe they have a commercial
future, but they would accept less in other areas.
121. That is fine. Did the County Council re-tender
for those services?
(Mr Welch) Yes, we did.
122. What happened there?
(Mr Welch) We had two tenders of which only one offered
all the services that we were requiring.
123. What was the cost of the re-tendering exercise,
both in administrative time and effort, and also in terms of the
subsidy required?
(Mr Welch) In administrative time, it was basically
using our own existing staff resources to do that exercise and
leaving other projects to a later date. Obviously the outcome
was an increased subsidy bill of £175,000 per year.
Chairman
124. That is not quite economic, is it? What
you are saying, in effect, is that you lost the cost of the re-tendering?
(Mr Welch) The costs of re-tendering really had to
be absorbed by postponing other work, yes.
Mr Stevenson
125. What I am trying to get at is the amount
of, if you like, public subsidy that was provided for a given
level of service, and when you re-tendered, how much more public
subsidy you were faced with because of that re-tendering outcome?
(Mr Welch) It is £175,000.
126. It is ongoing?
(Mr Welch) Yes.
127. For the same level of service?
(Mr Welch) For the same level of service, yes.
128. Could I turn to Lincolnshire, please, because
you faced a similar situation, facing significant commercial service
cuts. Would you describe the situation across in Lincolnshire
in similar terms to what we have heard from Mr Welch?
(Mr Cross) Not proportionally in the same scale, but
it did cost us £100,000 per year to put those services back
in Lincoln.
129. Yes. But nevertheless, you had a level
of service that you knew or thought was commercial; it was withdrawn,
you re-tendered, and it cost your authority £100,000 per
year?
(Mr Cross) £100,000, yes.
130. The Government tell us they are providing
an extra £3.3 billion in revenue for local authorities. Is
that sufficient? Is it going to find its way into any of these
services, do you think?
(Mr Cross) The changes in Lincoln were in the urban
area, and, of course, that then relies on the County Council's
own revenue support. In the rural areas, we get very substantial
sums from Government. We will need more if we want to fully implement
our bus strategy, but at the moment, through the Rural Bus Grant,
for example, we get £1.7 million, which is substantially
more than the County Councils traditionally put into bus services.
131. Very quickly and finally, are the bus operators
reasonably cooperating with you?
(Mr Cross) If I could answer for Lincolnshire, we
have very good cooperation with our operators, I would say.
Mr Stevenson: Even against the backcloth of
the cuts?
Chairman
132. How much notice did they give you, for
example?
(Mr Cross) The statutory notice, plus perhaps a week,
so we essentially had seven weeks' notice of the change.
Mr Stevenson
133. It is an interesting type of cooperation
when the local authority is faced with a bus service that is costing
A, and then because of a unilateral decision to withdraw those
commercial services, it is faced with A plus plus plus plus. That
sounds an interesting cooperation to me. Much more of that cooperation,
you will be out of business.
(Mr Cross) We recognise that the operators operate
within the commercial environment. They have to make their money.
If they made the judgment that those services were not commercial,
it is then up to the County Council to decide whether they wish
to subsidise. In other areas, I have to say, that very same operator
is cooperating very well with us and investing substantial sums
of money in support of our InterConnect project, for instance.
But that is the statutory framework in which we all have to work.
(Mr Chorlton) We do sometimes have more notice in
terms of our normal discussions with them. They will tell us when
a particular route is looking a bit uncertain and if it carries
on, in three months, it might be de-registered because things
are going that way. Sometimes we will work with them to help promote
it; other times that extra time gives us an opportunity to consider
whether we want to rearrange our existing subsidised services
to adjust for that. So that sort of cooperation does take place.
If I could just explain in terms of withdrawals in our part of
the world, of the 320 registered bus services in Devon, only 125
of those are commercial. In the last year, 12 of those have been
withdrawn, and 24 have had reductions in the service, either reducing
at weekends or evenings. That is the sort of rate which seems
to be accelerating. During the early 1990s, 1990-97, it was stable.
Those are the sorts of reductions which are taking place at present.
Mrs Ellman
134. Mr Chorlton, at the beginning of the session
you said that you all welcomed Challenge Fund initiatives. Looking
to the future, would you like to see those initiatives continue
in that form, or would you like them to be incorporated in local
Transport Funds?
(Mr Chorlton) The advantage of Challenge Funds is
that they provoke innovation. They challenge you to actually come
up with innovations. The disadvantage is that they are usually
time limited, and so from day one, you are thinking about your
exit strategy rather than concentrating on the innovation, so
there is an issue and a problem there. I do not think they will
survive, the Rural Bus Challenge in the deep rural areas, without
future subsidy. So the question is how does one deal with that?
One possibility would be to look at trying to link them better
into local transport plans which have a five year life, of which
we do an Annual Report, and perhaps the Challenge could be through
the Annual Report. If we have an innovation, we could make a submission
at that point and try to integrate the local transport plan and
the bus challenges more greatly. The problem is, of course, local
transport plans are about capital money and bus challenges are
about revenue money. That should be possible to overcome, but
we will need ongoing subsidy. The nature of them is that they
are innovative, but they do not wash their face from a financial
point of view. The subsidy will need to continue in some way.
135. Are there any other views on that?
(Mr Cross) Yes. We have been the most successful authority
in gaining Rural Bus Challenge; we have had over £4 million
in the last four years, so I would naturally support the process.
Last year, the Government changed the Guidance and they also took
into account the best practice and encouraging authorities to
put in bids which built on previous best practice, and I think
that is a good approach, because there is only so far you can
go with innovation, and there comes a point when you should be
starting to implement what works.
(Mr Welch) Can I offer a slightly dissenting view
in terms of the amount of time it takes to put forward a Challenge
bid. We were unsuccessful for an Urban Bus Challenge bid, but
so were roughly four fifths of the authorities that submitted
a bid. It does take a lot of resources to put in a good bid at
a time when staff resources generally within the transport sector
are in short supply. So I would perhaps prefer to see a system
whereby the bidding for additional funds could be linked in with
the Local Transport Plan process, perhaps through the Annual Performance
Review, rather than have to take a risk that we are or are not
going to be successful through a bidding process.
136. Are there any changes you would like to
see in local transport plans, and perhaps combining revenue and
capital streams? That was mentioned by Mr Chorlton. What would
your views be on that or any other changes you would like to see
that would assist innovation, but give longer term security to
the proposals you have?
(Mr Cross) The biggest problem we have is on revenue
funding rather than capital, I would say. The cost of supporting
rural bus services and maintaining them is considerable. We are
spending something like £3 million on revenue support in
the rural areas now.
(Mr Chorlton) I think the sort of changes that you
need is probably not so much in the LTP system, but rather at
the margins of the legislation. For example, community bus drivers
cannot be paid, and yet there is a shortage of volunteers. That
is a problem. With our fare car system, we have one operator who
operates a fares car system, it has been quite successful, and
we occasionally get as many as 16 passengers, so he can use his
mini bus. But if he does that, it should be a registered service
and go daily, but this is a demand responsive one, so we had to
get over it by calling it an "excursion". As we are
trying to do what we are all trying to do and want to do, it is
ridiculous that we should have to try to find ways around the
legislation when everybody agrees that what we are trying to do
is sensible. So it is at the margins of the legislation that I
think would be the greater gains.
137. What about Fuel Duty Rebate/Bus Operators
Grant? What changes would you like to see there? Do you think
that we all get value for money?
(Mr Chorlton) I take the very strong view that bearing
in mind it is now called Bus Operators Support Grant; if it is
called that rather than Fuel Duty Rebate, we should think of it
in those terms. I think it should relate to emissions; it should
relate to the quality of buses; it should related to the quality
of service, and it should be an incentive for that. Under the
Disability Discrimination Act, we have to have all these DPTAC
buses by another 12, 13 years hence. We actually need to accelerate
that process, otherwise there will come a point where in 15 years
hence, about half of the service will be with old buses and then
prices will shoot through the roof. It could be used as an incentive
to persuade bus companies to move to DPTAC specification more
rapidly rather than getting whatever type bus they use. I know
there is some connection with emissions but we do actually need
to see the quality of buses and the service improve.
(Mr Cross) I have one particular issue with Fuel Duty
Rebate and that is that it does not apply to demand responsive
type transport. Conventional bus services are eligible. From 1
May Community Transport is eligible, and this is the only form
of public transport which now does not receive Fuel Duty Rebate.
In Lincolnshire we are using Rural Bus Grant to support the demand
responsive flexible services. It means that the Grant does not
go as far because they are not eligible for fuel duty rebate.
Chairman
138. It is not in any of the definitions?
(Mr Cross) That is right, and it has to be a fixed
route. I set out in my written evidence, in terms of our demand
responsive services, that it is equivalent to £1.00 per passenger,
which is a very substantial amount of money we are losing.
(Mr Chorlton) I would certainly support what Tony
has just said, but if the Government's objective, rightly or wrongly,
is to increase bus passengers by 10 per cent, then there perhaps
is more logic in having a system of Bus Operators Grant which
is focused on those objectives rather than purely running more
miles, which may or may not be a good thing, but if there is a
change to Bus Operators Grant to reflect that, then we need to
recognise that will put even more pressure on rural areas where,
by definition, fewer passengers will actually travel. If there
is going to be a change in that system, then we need to look at
the impacts, both in the urban medium sized town and the rural
areas, and they will be different.
139. There is not any reason why, because of
the slightly different situation from one County to another, the
Government should not set up a number of trial schemes, is there?
(Mr Chorlton) Not at all, no.
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