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

Memorandum by Stagecoach Group plc (Bus 48)


  Stagecoach Group is one of the largest operators of bus services in the UK, running a fleet of around 7,000 buses and coaches across the country. Our business is committed to increasing the number of people travelling by bus through targeted investment and providing our customers with safe, easy-to-use, quality services, offering value-for-money fares.

  Stagecoach runs service networks stretching from Devon to Inverness, connecting communities in small towns and rural areas, as well as major urban centres such as Newcastle, Manchester and London.

  More than £120 million has been invested by Stagecoach in new vehicles over the past three years as part of its commitment to quality bus services. New buses are designed to be fully accessible to elderly passengers, people with disabilities and families with young children.

  All new vehicles meet tough Euro III emissions standards and ultra low sulphur diesel is used throughout the fleet as we work hard to attract car users to take the "green" alternative to congestion and polluted cities. The average age of our fleet is seven years.

  We recognise that simple, accessible information is a key factor in encouraging people to travel by bus. Our dedicated website,, provides customers with key information about our services, including timetables, ticketing and fares. We are also rolling out our Guide to major centres, providing a comprehensive explanation of our services and information about those of other transport providers.

  Stagecoach is a major employer, providing jobs for 18,000 people at our 12 regional companies and 90 depots across the UK.

  We note the terms of reference of this Inquiry and welcome this opportunity to submit evidence to the Sub Committee.


  1.1  Bus-related public spending in Great Britain is amongst the lowest level of spending in the EU. In 2000-01, bus-related public spending amounted to £1.1 billion, accounting for 32 per cent of total industry income. In some countries, the level of bus subsidies is as high as 70 per cent. In the UK, Fuel Duty Rebate accounts for some 32 per cent of the £1.1 billion, concessionary travel reimbursement makes up some 41 per cent and payments for contracted services account for the remaining 27 per cent of this expenditure. Any support for the bus industry is fully transparent, accountable and independently audited.

  1.2  Currently, the industry receives a rebate of 80 per cent of the tax paid on fuel consumed operating local bus services. However, until 1994 it received 100 per cent rebate and we would wish to see this reinstated. This would end what is effectively a tax on bus usage and bring the bus industry into line with the rail and airline industries. It would also mitigate the impact of cost increases, reduce the pressure on bus fares, provide an incentive for more people to travel by bus and contribute to social inclusion. (See 1.4).

  1.3  Concessionary travel payments are not a subsidy to the bus industry. These schemes are a direct passenger benefit. Payments are a reimbursement to bus operators on behalf of passengers who have been granted discounted fares by their Transport Authority. Because the regulations require that an operator is no better or worse off as a result of the concession, this does not represent a subsidy to the industry. In many instances, the value of the concession to targeted groups has been reduced in recent years as a result of a shortage of revenue funding available to the Authorities concerned. Indeed, Local Authority funding for concessionary schemes fell by 15 per cent in real terms in the 10 years to 2000-01. Where concessionary fares have increased there has been a marked reduction in passengers carried. While it is a matter for central and local government to determine which groups of passengers should receive concessions and to what value, it would appear that granting of concessions to the unemployed, those on low incomes and to children would aid social inclusion.

  1.4  Contracted services are specified by Local Authorities and are the subject of competitive tender. In this regard, they are similar to any other product or service the Local Authority determines to procure. The increased prices of such contracts over recent years reflect the increased costs that bus operators have been facing, particularly insurance, labour and fuel costs. However, Local Authority expenditure on concessionary travel and contracted services combined is now over 50 per cent lower in real terms than it was in 1985.

  1.5  We welcome Rural and Urban Bus Challenge schemes, which should point to new and better value ways of providing public transport in areas where conventional bus services are no longer appropriate. However, if these are to be of maximum benefit they will need to be carefully monitored and any resulting best practice must be widely disseminated.


  2.1  Delivering better public transport has to be a partnership between Government, Local Authorities, bus operators—and local transport users. We fully support the creation of Quality Partnerships in which operators and Authorities each agree to invest in improving bus services. Local Authorities can deliver bus priority measures and effective enforcement as well as other improvements to the bus infrastructure, whilst the bus operators invest in low-floor, low-emission buses and improved ticketing and information facilities. By working together, we can significantly enhance the overall experience for our customers.

  2.2  Where we have been able to develop strong and effective partnerships we have achieved significant increases in the number of people choosing to travel by bus. For example:

    —  In Cambridge, where Stagecoach has invested £4.5 million in new vehicles, there has been 20 per cent patronage growth in less than six months.

    —  In the Blackwater Valley, there has been a 15 per cent increase in the volume of bus passengers over a similar six-month period as a result of a partnership between Stagecoach and a number of Local Authorities.

    —  In Oxford there has been a sustained 5 per cent per annum patronage increase, year after year.

    —  In Portsmouth a 25 per cent passenger increase has been recorded on the Leigh Park corridor in 15 months.

    —  Interurban partnerships have also delivered growth of 35 per cent on the Brackley—Banbury corridor and 15 per cent on the Nuneaton—Coventry corridor.

    —  In Scotland, our award-winning partnership with Fife Council to operate the Ferrytoll park and ride scheme is regularly taking more than 400 cars a day off the roads since its launch 18 months ago, and demand for spaces will soon reach the full 500-car capacity.

  2.3  The Transport Act 2000 enables Authorities to introduce statutory Quality Partnerships in which they can specify minimum vehicle standards and which require all parties to commit to their various obligations. These give certainty to everyone and it is disappointing that no Authority has yet sought to introduce one.

  2.4  By contrast Quality Contracts, which involve the letting of exclusive contracts for the provision of bus services, do not need to include any provisions for the enhancement of the bus-operating infrastructure. They would also break the current direct link between operators and their customers. In such situations there is no guarantee of any passenger benefits and every prospect of an increased cost to the public purse. The contracting process alone is estimated to cost between £40 million and £70 million per annum and a further 50 per cent of that would be incurred in operator bid costs, which would be reflected in tender prices. Many Authorities have identified this potential increased cost, and they therefore see them as a last resort. This is what the Transport Act 2000 envisages.

  2.5  Regulatory change will not alter the economics of the bus industry. However, it will create further uncertainty, which will undoubtedly impact on investment. Quality Partnerships are in their early stages. In the relatively short time since the Transport Act 2000, our experience is that they are delivering real growth in areas where we can work together with forward-looking Local Authorities.


  3.1  Stagecoach market research shows that customers and potential customers regard service reliability and punctuality as the single most important determinant of whether or not they will use a bus service. This is of far more fundamental significance than any debate around the relative merits of bus quality partnerships and quality contracts. If we are unable to deliver reliable and punctual services, there will be no prospect of either retaining existing passengers or attracting new ones. Making the buses run on time, like making the trains run on time, requires dedicated effort from both the operators and the track authorities. Traffic congestion is unpredictably variable from one day to the next, making good timetabling without priority measures and consequently service reliability, impossible to deliver. In turn, this inevitably affects customer confidence in the bus as a transport mode of choice.

  3.2  Bus lanes not only add more certainty to the bus journey time but they speed passengers' journeys and reduce bus operating costs. Less tangible benefits are derived from raising the status of the bus with passengers and the community at large and of bus driving as a career. Bus lanes are also good for social inclusion, if it is accepted that bus passengers are more likely to be socially excluded than motorists.

  3.3  Once provided, it is vital bus lanes are enforced. A single vehicle parked in a bus lane will negate the benefit for the duration of the offence. Perhaps understandably, enforcement is invariably not high on Police agendas and this can be a major problem. For example, in Manchester the benefits of the A6 Quality Bus Corridor, which is currently being created, are not being realised because of persistent illegal parking in the Longsight district centre by as many as 20 cars at a time. Illegal parking at bus stops can also cause genuine distress to passengers with disabilities who have boarded a low floor bus only to find that they cannot alight easily because the bus has been unable to pull into the kerb at their stop.

  3.4  Unfortunately, in many areas traffic congestion continues to increase. This means that bus operators have to continually review services just to maintain reliability. The failure to introduce bus lanes increases bus operating costs as operators are forced to introduce more vehicles to services in order to maintain reliability in the face of increasing traffic congestion. In the Manchester area alone, Stagecoach has introduced 60 extra buses in the past three years to combat the effects of congestion and overall operating speeds have reduced by 8 per cent in the past 12 months. These requirements for increased resources merely serve to accelerate cost inflation in the bus industry.

  3.5  Some traffic delay hot spots can be eliminated without recourse to bus lanes simply by re-phasing traffic lights or by installing transponders on buses which activate the signals when they are detected. However, many Highway Authorities are not resourced sufficiently to address these problems quickly.

  3.6  Highway Authorities have a key role to play in delivering bus priority, controlling road works and in their parking management policies, all of which have a major impact on the speed and quality of bus service provision. In Metropolitan areas, where traffic problems are often at their worst and highways and transport responsibilities are split, we would advocate the creation of a Traffic Director, following the London model, with the specific responsibility and powers to ensure the efficient movement of traffic in general and buses in particular. Such an appointment would speed up implementation of the measures necessary to deliver bus service speed and reliability.


  4.1  The bus industry already operates in a highly regulated environment. It is subject to all of the usual regulations affecting business, including the requirements of the Health and Safety Executive. Additionally, the Traffic Commissioners and the Vehicle Inspectorate are responsible for ensuring that the industry meets quality standards. They ensure that drivers' hours regulations are not breached and they have been applying progressively higher standards to vehicle maintenance and service timetable adherence, all policies that we endorse in principle.

  4.2  Our top priority is improving even further the punctuality and reliability of our services and we fully support the setting of targets. However, we are concerned that traffic congestion and an absence of effective bus priority and enforcement is making the Traffic Commissioners' newly published standard for bus service punctuality (95 per cent of buses within one minute early and five minutes late of schedule) unachievable in some areas. It is a more rigorous standard than ever achieved by the railway industry, and buses do not have the benefit of restricted access to their track. Instead, we would prefer to see local performance standards agreed with the highway authority for each service, to which both bus operators and highway authorities would be accountable to the Traffic Commissioner. As more priorities and other measures were put in place, we would expect the standard to be progressively raised.

  4.3  The industry does not have an economic regulator, as it is not a monopoly supplier. Instead it is subject to the jurisdiction of the Office of Fair Trading using its powers under the Competition Act 1988. These include substantial penalties for both anti-competitive agreements and also abuse of a dominant position. The Enterprise Bill, if enacted, strengthens OFT powers yet further.

  4.4  The introduction of an additional economic regulator for the industry is unnecessary given the existing jurisdiction of OFT and the competition buses face from the private car and increasingly from taxis. It would be expensive to provide and would inevitably have to be paid for by the industry's customers—its passengers.


  5.1  Bus services make a major contribution to reducing social exclusion. Social inclusion is as much about accessibility to bus services for people on low incomes in urban centres and small towns as it is for people living in rural areas. Buses are used three times as much by households without cars as by those with them and people in the lowest income range use buses twice as much as people in the highest fifth.

  5.2  Measures that give priority to buses, thereby improving their reliability and speed, therefore enhance social inclusion.

  5.3  Surveys of transport social exclusion show that the greatest social exclusion occurs for shopping journeys, where people no longer have access to local shops and where they do not have a car available to reach their nearest superstore.

  5.4  In urban areas the lowest car ownership corresponds with the most frequent bus services and improving the quality of these services is an effective way of minimising social exclusion.

  5.5  In rural areas where demand for public transport is more limited, we believe that demand responsive services, particularly if they can be integrated with a trunk bus service, may provide the most cost-effective way of reducing social exclusion.

April 2002

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