Memorandum by the Confederation of Passenger
Transport (Bus 10)
THE BUS INDUSTRY
The Confederation of Passenger Transport UK
(CPT) is the trade association for bus, coach and light rail operators.
We welcome the opportunity to contribute to this inquiry. Our
submission follows the terms of reference.
1. SUBSIDIES
IN THE
UK BUS INDUSTRY,
AND THE
RESULT OF
BUS CHALLENGE
INITIATIVES IN
RURAL AND
URBAN COMMUNITIES
Total bus-related revenue spending was about
£1.1bn across GB in 2000-01. 1 This is low by international
standards. CfIT found that bus passengers in the UK receive less
support from government sources than in any of the ten other EU
countries studied—see Table 1. In the UK subsidies and grants
make up 32 per cent of revenue compared with 68 per cent from
fares.
Table 1
PROPORTION OF BUS REVENUE FROM SUBSIDIES
AND GRANTS2
| Austria | Belgium
| Italy | Holland
| Denmark | France
| Greece | Sweden
| Germany | Spain
| UK |
| 70% | 68% | 60%
| 60% | 48% | 48%
| 45% | 45% | 38%
| 33% | 32% |
(a) Fuel Duty Rebate
The FDR reduces the cost of fuel to operators and therefore
reduces fares: a direct benefit to passengers. However it only
covers 80 per cent of the full duty, leaving passengers to pay
20 per cent of the duty at a cost of £90m per annum. This
is effectively a tax on public transport. Raising the FDR to 100
per cent would be a return to the pre-1994 position.
Raising the FDR would bring the tax treatment of bus passengers
broadly into line with those travelling by rail and air. Currently
while bus users have to cover the cost of 20 per cent duty on
diesel, rail users pay 0 per cent on electricity or 7 per cent
on diesel, and air passengers pay 0 per cent on aviation fuel
(although there is a passenger-based tax). The higher tax on bus
fuel is difficult to justify given that the socially-excluded
mainly use buses—not trains or planes.
Restoring the FDR to 100 per cent would help:
— Keep fare increases to a minimum and compete with
the car. Over the last decade bus fares have increased by 24 per
cent in real terms, while motoring costs have increased by only
11 per cent. 3. This relative increase in fares reflects wage
increases and has happened despite the fuel duty escalator. With
the scrapping of the escalator in 1999, specific measures (such
as 100 per cent FDR) will be needed to maintain the competitiveness
of the bus.
— Maintain the viability of the commercial network,
which currently accounts for 84 per cent of all services. For
these services the FDR is the only form of public support that
operators receive. 4
— Reduce the cost of secured services—the
remaining 16 per cent of services.
— Maintain investment levels.
We support the reform of FDR, once the full rebate has been
restored, so that it gives a clear incentive for operators to
carry more passengers. The additional 20 per cent of FDR should
be paid in the form of an incentive payment per passenger journey
or passenger km.
(b) Secured services
Local authorities and Passenger Transport Executives (LAs/PTEs)
purchase non-commercial services by a competitive process. These
public sector purchases are not subsidies to operators. Passengers
benefit from weekend and evening services and rural services,
for instance, that do not attract enough passengers to be commercially
viable, but which are nevertheless a vital public service.
Over the three years to 2000-01 the cost of these services
(per bus km) increased by between 11 and 12 per cent per annum.
5 These increases reflected operators' cost pressures, particularly
labour and insurance costs, which are set to continue. LAs/PTEs
should be allocated sufficient funds to maintain the secured network.
Cost increases could be minimised by the authorities using longer-term
contracts (at least five years), fully indexing them against transport
sector inflation, and raising the de minimis limits.
(c) Concessionary fare reimbursement
Operators receive compensation for carrying targeted groups
at reduced fares (or for nothing). This is a subsidy to the users,
not to the operator. A shortage of revenue funding for LAs/PTEs
has resulted in cuts in concessionary schemes in recent years.
In GB outside London spending on concessionary fare reimbursement
fell by 15 per cent in real terms over the 10 years to 2000-01.
6 (Spending in London has been almost unchanged).
Reduced spending on these schemes has clearly disadvantaged
OAPs in those areas (such as Greater Manchester and Tyne and Wear)
which have increased concessionary fares towards the statutory
minimum half-fare. In other areas, which previously had less generous
schemes, OAPs and the disabled are now benefiting from the statutory
minimum.
These schemes have a key role in maintaining and increasing
bus patronage. We believe that extensions to the existing schemes,
for example to children, students and the unemployed, can be justified
in social inclusion and Best Value terms. This could be achieved
by extending the statutory half-fare minimum or by providing local
authorities with more funding for their discretionary schemes.
Under the legislation operators should be "no better
and no worse off" from participating in concessionary fare
schemes. Our concern is that as a result of budgetary constraints
operators are not receiving fair compensation. Central Government
or the Audit Commission should give new guidance to LAs/PTEs on
how the no better and no worse off provisions should be implemented,
ensuring that operators are given fair compensation and are incentivised
to carry extra passengers.
(d) Rural and Urban Bus Challenge
We support the continuation of these funds. They have resulted
in some good innovative schemes, such as:
— A rural scheme in Devon involving seven new buses,
a full Smartcard system applicable to three local colleges, and
free or discounted travel for students.
— A rural scheme in Cornwall involving Demand Responsive
Transport and extra scheduled services from Bodmin Parkway Railway
station to surrounding areas; including Smartcards, real time
information and new vehicles.
— An urban scheme providing a night bus service
between Yarmouth and Lowestoft and extra services to the General
Hospital in the area, all overlaid on existing commercial services.
7
The main advantage of these funds is that they involve both
revenue and capital funding and that LAs/PTEs have to compete
for them. This is in contrast to the Rural Bus Subsidy Grant,
which only provides revenue funding and is allocated automatically
to rural LAs, on a per capita basis.
2. THE RELATIVE
MERITS OF
QUALITY PARTNERSHIPS
AND QUALITY
CONTRACTS
We support the use of quality partnerships (QPs), which are
formal or informal local agreements between operators, local authorities
and other parties. The usual components of these agreements are
shown in Table 2, although they vary according to local circumstances.
Typically QPs have delivered patronage growth of between 10 per
cent and 30 per cent, with 60 per cent and 75 per cent on guided
busways (examples are available on request).
Table 2
TYPICAL COMMITMENTS UNDER VOLUNTARY QPS
| Operators agree to: | Local authorities/PTEs agree to:
|
| Invest in new vehicles with low-floor access and low emissions
| Invest in bus priority measures and effective enforcement
|
| Provide more frequent services | Improve bus stations and bus stops, including new bus shelters
|
| Improve ticketing arrangements and passenger information
| Improve passenger information |
Under the Transport Act 2000 and the Transport (Scotland)
Act 2001 the QP concept has been developed through the provisions
for Quality Partnership Schemes (QPS). Within a statutory QPS,
operators can be excluded from benefiting from, for example, bus
priority measures if they do not meet the scheme's quality standards.
We support the introduction of statutory QPSs in all major towns
and cities in Britain.
The main advantage of voluntary or statutory QPs is that
they can deliver bus priority.
In contrast quality contracts (QCs), which involve the letting
of exclusive contracts for running services, would not necessarily
improve bus priority. QCs would also have other problems:
— Networks would be based on political priorities
rather than customer needs.
— They would probably not provide any financial
incentives for operators to carry more passengers.
— The extra administrative costs would be significant.
The costs to LAs/PTEs of drawing up contracts, evaluating tenders
and monitoring contracts are estimated at £40 million to
£70 million per annum across GB outside London. The extra
costs for operators, in submitting tenders, are estimated at £20
million to £40 million per annum, and would be passed on
in higher tender prices. 8 This money would be better spent on
extra bus services.
— Bidding would lead to downward pressure on staff
terms and conditions.
— They would be disruptive to the industry. The
uncertainty would lead to lower investment levels and service
withdrawals.
Our strong preference is for QPs rather than QCs. This is
consistent with the Transport Act 2000, which provides for QCs
when they are the "only practicable way" of implementing
the local Bus Strategy, and where they are "economic, efficient
and effective". Similar conditions, in effect, apply in Scotland.
We believe that QCs will only be relevant in wholly exceptional
circumstances.
3. THE IMPORTANCE
OF BUS
PRIORITY MEASURES
AND THEIR
ENFORCEMENT
Market research shows that improving reliability is the top
priority for the general public:
Table 3
TOP PRIORITIES FOR IMPROVING BUS SERVICES OVER THE NEXT
FEW YEARS9
| 1. | Punctuality/reliability (26%)
|
| 2. | Frequency (23%) |
| 3. | Level of fares (17%) |
| 4. | Number of places accessed (14%)
|
| |
Increasing the level of bus priority is, along with the introduction
of congestion charging, the best way of improving reliability.
Effective bus priority requires:
— More bus priority schemes, such as bus lanes and
bus priority at traffic junctions. These can be implemented quickly
as part of Local Transport Plans (LTPs) and Local Transport Strategies
in Scotland. Bus lanes are much less expensive than light and
heavy rail lines—see Table 4. Bus priority schemes typically
produce time savings for bus users of between one and five minutes
per journey. 10
— Better enforcement of bus lanes and parking restrictions.
This requires the police authorities to give a much higher priority
to this type of work. Also the highway authorities can have an
increasingly important role, following decriminalisation of parking
offences.
— Better highway management. The highway authority
has a key role in implementing priority measures for buses and
bus passengers, and controlling parking and road works—all
of which are critical to speeding up buses. However in many areas
the authority's commitment is lacking—partly due to the
highway authority and passenger transport authority being different
entities in the Metropolitan areas. We advocate the appointment
of a Traffic Director in each PTE area, following the model of
the Traffic Director in London (now part of TfL). The London director
was responsible for implementing traffic management measures on
the Red Routes and had the specific aim of ensuring the efficient
movement of buses.
— More guided busways, to physically exclude other
vehicles from bus lanes. Both guided busways and light rail can
offer good value for money on the busiest urban corridors, but
busways have the advantage of lower infrastructure and vehicle
costs—see Table 4. They also offer greater flexibility—the
buses can be used on normal roads as well as on the busways. Schemes
in Leeds and Ipswich, which include bus lanes as well as busways,
have resulted in patronage growth of between 60 per cent and 75
per cent.
Table 4
BUS LANES, GUIDED BUSWAYS AND LIGHT RAIL COMPARISONS11
| Cost per km in £m
| Cost per vehicle in £m | Passenger flows per hour
|
| Bus lanes | 0.3 | 0.11
| 450 to 1500 |
| Guided busways | 2.2 to 4 |
0.12 | N/A |
| Light rail lines | 3.7 to 10
| 1 to 2 | 900 to 2500 |
Adequate capital funds are available to LAs/PTEs to invest
in bus priority, guided busways and other bus-related schemes:
the LTP settlement in England provided authorities with capital
funding of £8.4 billion between 2001-02 and 2005-06, while
£150 million is available in Scotland through the Public
Transport Fund between 2001-02 and 2003-04. 12 However the political
will is often missing: reallocating roadspace to buses can be
politically difficult. Other options like new roads and light
rail are often more attractive. Other major problems are a lack
of revenue funding, for operating and maintaining schemes, and
skills shortages.
4. REGULATION OF
THE BUS
INDUSTRY
The bus industry is heavily regulated at present, by the
Traffic Commissioners, the Vehicle Inspectorate, the Office of
Fair Trading, the Health and Safety Executive and others. The
main regulators are the Traffic Commissioners. Although we are
critical of their new standards for punctuality, we support their
continued existence and would oppose the establishment of a new
bus industry economic regulator. We would also oppose the regulation
of the industry by LAs/PTEs, which would be the direct result
of the introduction of QCs.
The Traffic Commissioners' new national standards for punctuality
for local bus services are unrealistic. The main standard is that
95 per cent of buses must not be more than five minutes late or
more than one minute early. This is a much higher standard than
was achieved on the rail network even before Hatfield—despite
the fact the bus operators have even less control over the highway
than the train operators have over the track. It is also more
onerous than the standards for buses in London. The national standards,
and the threat of penalties for operators, will lead to the widespread
withdrawal of commercial services, or slower services, neither
of which would be in the passenger's interest.
Instead of these national targets, we support locally-agreed
targets for punctuality—as well as for average bus speeds.
They should be agreed by operators and LAs/PTEs (including the
highway authorities) and should reflect local traffic conditions
and progress on bus priority. The Traffic Commissioners should
be responsible for ensuring that such targets are fair to all
parties. The targets should be included in LTPs and Bus Strategies—as
recommended in the 10-Year Plan. 13
5. THE CONTRIBUTION
OF BUS
SERVICES TO
REDUCING SOCIAL
EXCLUSION
Bus services are making a major contribution to reducing
social exclusion14:
— Bus use is highest amongst socially excluded:
people in the poorest fifth of households use buses almost twice
as much as in the richest fifth; those in households without cars
use buses three times more than those in households with cars.
— Buses are the main form of local public transport,
accounting for 74 per cent of all public transport journeys under
10 miles; 87 per cent of people live within six minutes' walk
of a bus stop.
— 29 per cent of the population—16 million
people—use the bus at least once a week.
This contribution would be increased if there was more bus
priority (Section 3) and increased revenue support (Section 1).
REFERENCES
1 DTLR (2001) Bulletin of Public Transport Statistics.
2 CfIT (2001) European Best Practice in Delivering Integrated
Transport.
3 DTLR (2001) Bulletin of Public Transport Statistics.
4 Concessionary fare schemes subsidise the user not the operator.
5 GB data derived from DTLR (2001) Bulletin of Public Transport
Statistics. Spending includes other "public transport support".
6 DTLR (2001) Bulletin of Public Transport Statistics.
7 All examples are from First (Pers. Comm.).
8 NERA (1997) Evaluating Alternative Structures for the Bus
Industry. Report for CPT.
9 CfIT (2001) Public Attitudes to Transport in England. MORI.
10 TRL (1999) A Comparative Assessment of Major Bus Priority
Schemes in Great Britain.
11 C Hass-Klau et al (2000) Bus or Light Rail: Making
the Right Choice. Passenger flows are based on German cities:
buses (partly with bus lanes) and light rail.
12 DETR and Scottish Executive.
13 DETR (2000) Transport 2010: The 10 Year Plan.
14 All data from DTLR.
April 2002
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