Memorandum by North Hertfordshire District
Council (Bus 06)
THE BUS INDUSTRY
1. BACKGROUND
1.1 This submission is made on behalf of
North Hertfordshire District Council. It is solely focused on
the role of subsidy in the bus industry but has implications for
all other aspects being considered by the Sub-Committee.
1.2 The Council is not the Passenger Transport
Authority in the district but contributes up to 25 per cent funding
towards bus services contracted to Hertfordshire County Council.
1.3 The above arrangement has now been in
place since 1987. The Council is increasingly concerned about
the growing financial burden on it, arising from increased withdrawals
and changes made to commercially run services and growing concessionary
fares reimbursement. This current trend is not financially sustainable
from the Council's perspective.
1.4 The bus network in North Hertfordshire
has very little genuine "competition" as intended by
deregulation and, as such, this is unlikely to deliver genuine
quality of service to customers.
1.5 In the Council's view the commercial
operators in the district operate on the basis of managing decline
and keeping costs down. This is in considerable contrast to the
rail industry, which (despite recent setbacks) continues to plan
for growth.
1.6 In addition the Council considers that,
in a semi-rural district with no town larger than 30,000 population,
the bus offers the most realistic means of encouraging large numbers
of people out of their cars for local journeys.
1.7 The Council is concerned that the current
trends for bus service provision are unlikely to result in modal
shift and do not adequately address social exclusion issues.
2. SUBSIDIES
IN THE
UNITED KINGDOM
BUS INDUSTRY
2.1 The Council has a 15-year history of
subsidising non-viable bus services in the district in partnership
with Hertfordshire County Council. Attached at Appendix A is a
summary of the annual contributions made by the Council. This
represents approximately one quarter of the cost of providing
contracted bus services (excluding school services) in the district.
2.2 As the figures in Appendix A show, the
Council's financial contribution towards bus contracts has almost
doubled since 1994-95. This corresponds with a decline in commercially
viable services within the district.
2.3 Hertfordshire County Council's recently
published draft Bus Strategy suggests that local bus operators
receive the majority of income via "subsidy" from local
authorities. In particular this falls into two specific areas,
concessionary fares and contracts.
2.4 The operators' reliance on concessionary
income is demonstrated every year during the annual negotiations
between authorities and operators. Each year operators make it
clear that without satisfactory reimbursement the service will
decline. Local authorities are forced to decide between reimbursing
operators to effectively support the continued network and the
annual requirement to reduce costs.
2.5 The Council currently pays operators
£280,000 for its elderly and disabled concessions. The increase
in contracted services effectively means that the Council is subsidising
operators twice on many services (via contract and concession).
2.6 A key indicator of the declining commercial
nature of the bus industry in the district is the key policy aim
of Hertfordshire's Bus Strategy, namely to stabilise the bus industry.
This further underlines the inability of a commercial industry
to deliver services that will achieve the Government's Ten Year
Plan target.
2.7 This Council's view is that the situation
is likely to decline further with more commercial withdrawals
and, with the equality of retirement age for concessions, an increased
financial burden on the authority.
2.8 The conclusions to be drawn from the
above are as follows:
— The Government must be aware of the
increasing financial burden being placed on District Councils
and ensure that sufficient financial resources are available to
this Council each year.
— Looking to the long term, the Government
should consider providing more powers and resources to Local Authorities
to actively deliver the bus network in districts which are not
currently "good bus territory".
Simon Young
Transport Policy Officer
12 April 2002
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