Memorandum by The Public Transport Consortium
(Bus 45)
THE BUS INDUSTRY
SHIRE AREA BUS SERVICES IN THE DEREGULATED
ENVIRONMENT
1. THE PUBLIC
TRANSPORT CONSORTIUM
1.1 The Public Transport Consortium is an
all party grouping of local authorities outside the metropolitan
areas with a responsibility for, and a particular interest in,
public transport. It is a Special Interest Group of the Local
Government Association and its members are County Councils and
Unitary Authorities in England and Wales with direct experience
of bus operations.
1.2 It is fair to say that generally Consortium
members are becoming increasingly concerned at the ability of
the industry to meet the Government's targets set out in the 10
Year Plan, of which members are in general in full support. This
paper discusses the situation outside metropolitan areas and suggests
some ways in which changes to the current approach could help
towards those objectives.
2. THE CURRENT
SITUATION
2.1 The total bus network is made up of
commercial (profitable) and supported services. The supported
network is typically 20-30 per cent of the total, with the emphasis
on evening, weekend, school and rural services.
2.2 The worst performing supported services
require the highest subsidy per passenger. An effective co-ordinating
authority will monitor this area closely seeking good housekeeping
savings and more cost-effective solutions, or non-conventional
bus alternatives.
2.3 The commercial network is typically
70-80 per cent of the total and are mainly daytime Mondays-Fridays/Saturdays
urban and interurban services.
2.4 The interface between the networks is
unstable. Supported networks must respond to operators' actions
on the poorest performing commercial services. As this interface
is related to commercial financial performance, it is not clearly
defined and the reality is that commercial and supported services
are to a large extent intertwined.
2.5 The Transport Co-ordinating Authorities
are in an inevitable reactive role with respect to commercial
changes at the interface, and because marginal commercial services
compare with the best performing support services, the deregistration
of commercial services prompts the co-ordinating authority to
replace them with supported services. Without consequent action
to achieve saving in the area of poorest performing services the
support bill will increase.
2.6 In many cases up to about 40 per cent
of the shire authority supported network is concerned with the
carriage of children to and from school—partly for statutory
free transport and partly for fare paying students. The supported
network is therefore closely related to the overall provision
of free school transport by the LEA.
2.7 The operators that tender for contracts
to the co-ordinating authority to operate the services in the
supported network are, by and large, the operators who provide
the services in the commercial network. By far the majority of
all services are provided by large national (and now multinational)
companies like Arriva, First and Stagecoach. In the UK context,
the most profitable areas in which these companies operate are
the larger urban areas where passenger volumes are already high
and there is potential to generate sufficient increases in patronage
(and therefore revenue) to justify large scale investment in new
vehicles and equipment.
2.8 This serves to disadvantage the shire
authority areas where there is, for sound commercial reasons,
less incentive for investment in predominantly small and medium
sized towns and rural services. Quality Partnerships (QPs) are
therefore orientated to the better performing commercial routes
where operators can expect to get best returns from investment
in new vehicles. Hence a large proportion of the network is unlikely
to benefit from Quality Partnership development in the short/medium
term.
2.9 The commercial services that do exist
in the more rural shire authority areas are lower priority and
poorer performers than elsewhere. Investment in new vehicles is
therefore less likely and many services are operated by buses
cascaded in from conurbations following delivery of new vehicles
to replace them in these areas. Even where new vehicles have appeared
on quality partnerships, the message from operators in shire areas
is that future QPs may be provided with refurbished cascaded buses
rather than new ones.
2.10 The conflict between conurbation and
small town/rural services comes into stark relief in places like
Cheshire where the shire county has three neighbouring conurbations,
two of which have PTEs. There is a great contrast between QP activity
in, for example, Manchester and in Cheshire towns.
2.11 Notwithstanding the greater opportunities
in the conurbations, the shire areas still have significant social
exclusion issues to tackle in which transport plays a major role,
especially in rural areas and enclaves of multiple deprivation
in many small and medium sized towns.
3. IMPROVING
THE COMMERCIAL
NETWORK WITHOUT
QUALITY PARTNERSHIPS
3.1 Introduction
3.1.1 Having recognised that QPs are likely
to be limited to the best performing commercial services it is
necessary to address the mechanisms available to improve the broad
band of only moderately performing services in the commercial
sector. Some mechanisms are already available, though with differing
levels of practicality.
3.2 Rural Bus Service Grant (RBSG) and Challenge
(RBC)
3.2.1 These are welcome as they allow for
new initiatives to be developed. RBSG provides the opportunity
to support and experiment with more marginal services than conventional
bus support permits. Quality can be addressed by specifying or
purchasing new accessible vehicles.
3.2.2 There remains concern about the long
term continuity of these services if RBSG is eventually withdrawn.
RBC allows experimentation away from the traditional method of
providing bus services with opportunity for more of a community
focus for using other vehicles besides conventional buses. Concerns
remain about exit strategies and continuity after, say, three
years. From recent discussions with the Minister it seems that
it be will necessary to continue support for these operations
from ordinary revenue support funds, at the expense of some conventional
services, thus adding to the problem referred to earlier.
3.3 Quality Contracts (QCs)
3.3.1 QCs are seen in the Transport Act
(2000) as the means of addressing improvement where QPs cannot
be provided. Effectively the QC gives the co-ordinating authority
the means to establish a London-style franchise operation, eliminating
on the road competition. However, there are a number of difficult
aspects which are making co-ordinating authorities reluctant to
pursue the QC approach:
— The co-ordinating authority is likely
to want to improve frequencies and quality of vehicles, so there
could be significant funding issues. If more vehicles are needed
to operate a QC, new premises may be needed and cost increases
could be substantial.
— If an operator were to lose its network,
must it be compensated for the assets no longer needed?
— If a QC is implemented to improve
the network within a given area and 50 per cent of the local service
is provided by through running interurban routes, must these be
incorporated within the contract?
3.4 Alternatives to the Bus
3.4.1 Alternatives are inhibited inter
alia by the licensing regime, the vested interests of commercial
operators and the resource commitment falling primarily to the
co-ordinating authorities in setting up and supporting innovative
solutions.
3.4.2 Nevertheless it is arguable that the
bus, outside the larger towns, is no longer a product which has
the power to persuade car users to switch to public transport.
The low frequency, fixed route large vehicle with problems of
unreliability and low service levels in the evening and at weekends
does not meet many of today's requirements.
3.4.3 There is scope for smaller, higher
quality vehicles providing door to door services to replace large
tracts of the conventional bus network. Many people today are
happy to choose taxis as an alternative to the car whilst they
would not consider the bus. Nevertheless the conventional taxi
with associated high charges is not the appropriate replacement
for the bus. The characteristic of the two modes must be melded
into an attractive alternative to both. Up to now developments
in this direction have been largely confined to the thinner areas
of demand in the rural areas as an alternative to the supported
bus. Commercial inertia and legislative restrictions have discouraged
innovation in commercial bus areas, where current ridership levels
are sufficient to provide a base load upon which attractive innovative
services can be developed. Here lies an opportunity to address
radically the middle ground of commercial bus and taxi operation
in the shire areas to provide an attractive alternative to the
declining bus.
4. BARRIERS TO
INTEGRATION
4.1 Commercial Interests
4.1.1 The statutory separation of the supported
and commercial networks is an underlying barrier to integration.
The 1985 Transport Act effectively prevents co-ordinating authorities
from intervention in the commercial area.
4.1.2 Fundamentally commercial competition
clouds the opportunities that operators may have to provide integrated
facilities. A significant proportion of corridors served commercially
are served by more than one operator. They inevitably see themselves
in a competitive position and the impact of this competition tends
away from the provision of an integrated approach to the customers,
as is evident in unco-ordinated timetables, incomplete publicity
and separate ticket system without inter-availability.
4.2 Competition Law
4.2.1 Commercial operators who may recognise
the overall advantages of co-operation to produce an integrated
and co-ordinated network are inhibited by competition legislation.
Agreement on operation is generally deemed to be anti-competitive,
so that on joint corridors spreading operation so that a regular
headway is created and acceptance of each other's return or season
tickets become difficult. The average member of the public is
generally only interested in catching the first available bus,
rather than the exercise of consumer choice. Insistence on a competitive
interface between operators overlooks the main competitor which
is the private car.
4.3 Information
4.3.1 Publicity on bus services is generally
poor: it can often be incomplete, difficult to understand or out
of date. If potential passengers find it difficult to obtain information
or receive wrong information on bus services, it is likely that
they will be resistant to switching to public transport. Similarly,
if at the bus stop no information is available, the customer is
left in an uncertain situation at an often exposed and isolated
location. Good publicity and information is therefore paramount
in encouraging greater bus use and it is generally held that the
cost of effective publicity can be recovered in the revenue from
resulting increased ridership.
4.3.2 In some areas publicity is still largely
left to the operators. However, many local authorities have endeavoured,
over the last 15 years in the deregulated market, to provide a
comprehensive and up to date service. Without this, in a competitive
situation an enquiry to a bus operator information point might
have produced misleading information with an unwillingness to
give details of the next bus or the full timetable on routes where
commercial competition is occurring.
4.3.3 The Transport Act 2000 makes provision
for co-ordinating authorities to take on the publicity role (and
charge operators), if they consider that operators are failing
to provide the required service. It is important that authorities
take up this responsibility and are not inhibited by resistance
from operators to making financial contributions.
April 2002
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