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Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by the Confederation of Passenger Transport (Bus 10)


  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.


  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


AustriaBelgium ItalyHolland DenmarkFrance GreeceSweden GermanySpain 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.


  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

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 servicesImprove 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.


  Market research shows that improving reliability is the top priority for the general public:

Table 3

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


Cost per km in £m Cost per vehicle in £mPassenger flows per hour
Bus lanes0.30.11 450 to 1500
Guided busways2.2 to 4 0.12N/A
Light rail lines3.7 to 10 1 to 2900 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.


  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


  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).


  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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