APPENDIX 42
Memorandum submitted by Graham Stringer
MP for Manchester Blackley
LOCAL TRANSPORT
PLANNING AND
FUNDING
BUS SERVICES
ACROSS THE
UNITED KINGDOM
I am submitting this paper as evidence to the
Transport Committee for both of the above inquiries as I am concerned
that during the oral evidence sessions, resonances of Mr Rowlands'
(Permanent Secretary, Department for Transport) extraordinary
performance before the Public Accounts Committee on 23 January
2006 have been apparent. I have therefore used the Greater Manchester
Passenger and Transport Authority as an example to test Mr Rowlands'
assertions.
TRANSPORT FUNDING
ALLOCATION IN
LONDON AND
PTA AREAS
In an oral evidence session to the House of
Commons Public Accounts Committee on 23 January 2006 (HC851-i),
Mr Rowlands suggested that the reason why London gets 31p in bus
subsidy per passenger when the rest of the UK gets 11p is because
out of the monies available "London has chosen to pay more
per passenger, and others have made a different choice".
To say the various transport authorities and Transport for London
(TfL) choose to allocate different levels of subsidy to bus services
is misleading if not disingenuous. Rather, it is a product of
the direct grant available to Transport for London and the way
public transport is funded in the rest of England.
The Greater Manchester Passenger and Transport
Authority (GMPTA) is funded by a levy on the ten District Councils
of Greater Manchester. District councils are under pressure from
central government to keep council tax rises below government
targets. If any of the 10 Greater Manchester Authorities exceed
Government limits they risk capping. District Councils' budgets
are under pressure particularly in terms of education, social
services and other essential local provision. At the same time,
district councils have to balance the competing precept and levy
demands from organisations such as GMPTA, the Fire and Civil Defence
Authority, the Police, the Waste Authority and so on. If District
Councils chose to divert funds away from other services to bus
subsidy it is likely that this could severely compromise other
Government targets outside the transport field. It is not therefore
the straightforward choice Mr Rowlands suggests. The implications
of above inflation levy increases would necessitate punitive and
damaging cuts to other essential services, and as a result, district
councils' hands are tied. Consequently last year, GMPTA agreed
in principle to limit annual levy increases to 4% for three years.
GMPTA say this allocation is only enough to maintain services
at current levels.
The other important point that Mr Rowlands either
fails to understand or convey is that choice plays little part
in the allocation of funds for Transport for London. Unlike PTAs,
TfL has a protected revenue stream, which is issued without competition
from other services—the direct transport grant from government—as
well as the locally administered funds via the Greater London
Authority (GLA). According to TfL's Statement of Accounts for
the year ending 31 March 2005, the direct transport grant amounted
to £2,260 million (in the same year total revenue from fares
and other services totalled some £2,555 million). The stability
of this budget is protected because these funds are ring-fenced
specifically for TfL. Clearly, the total revenue budget dwarfs
that of GMPTA's total revenue spend which totalled £119 million
(excluding Special Rail Grant) in the same year.
Transport grant funding is unique to TfL. This
grant, because it is administered centrally is not subject to
the same pressures experienced by PTAs outside London. This is
why it is wrong to describe the differing subsidy allocations
as a choice.
TfL is also in a much stronger position to borrow
funds. Recently, TfL agreed a funding settlement, which enables
£10 billion investment over the next five years. The grant
funding certainty provided by this and the introduction of new
prudential borrowing legislation has enabled TfL to establish
a £3.3 billion borrowing programme on top of a municipal
Eurobond worth £200 million. This investment was made much
easier due to the security guaranteed by TfL as a result of the
transport grant funding. In PTA areas the same level of revenue
funding to support capital investment does not exist and as such
PTAs can only dream of similar investment.
Moving on, Mr Rowlands said that over the last
five years, whilst RSG has gone up in real terms in PTA areas
bus subsidy has remained the same. Whilst this might be true as
an average across England, in Greater Manchester it is not the
case. In 2001 GMPTA paid 70.54p per mile in subsidy but by 2005
this had jumped to 112.61p. Similarly support for the general
network (excluding schools) in 2001 stood at £7.5 million
accounting for 9.8 million miles. In 2005 this figure has risen
to £12 million for just over 10 million miles raising serious
questions on value for money. In 2001, the total tendered bus
network, including schools services cost GMPTA £12.74 million.
By 2005, this figure has risen to £22.4 million. Despite
the increasing subsidy, the subsidised bus network has continued
to contract, largely because GMPTA has not been able to afford
to replace all withdrawn services. The net result is that the
people of Greater Manchester are increasingly paying more money
for fewer bus services. Between January 2003 and January 2006
alone, of 208 commercial withdrawals GMPTA was only able to replace
91. Clearly as a result, some local communities in Greater Manchester
are now without a bus service.
In addition to the cost of the tendered bus
network the PTA also devoted some £33 million towards paying
the cost of supporting concessionary travel for bus passengers
in 2005-06. The Authority has always offered a concessionary fares
scheme, which is more generous than the national minimum and continues
to do so by offering reduced rate travel to pensioners and disabled
people before 9.30 am and to children throughout the day. Despite
this considerable input of public resources however the Authority
has very little control over the standard of the 85% of bus service
provision in Greater Manchester that is operated commercially.
This lack of accountability to the Authority and the public for
the standard of service offered provides a disincentive to the
public sector to invest public resources in support of local bus
services. The position is very different in London where local
operators are answerable to TfL for the quality of service operated
across the capital. Mr Rowlands' response therefore over-simplifies
a complex situation and doesn't acknowledge the very different
circumstances that prevail inside and outside the capital.
Mr Rowlands was then questioned on three key
factors at play in the London delivery chain that explain rising
bus use in the capital. When asked to prioritise these dynamics
the Permanent Secretary refused, suggesting that it would not
be possible to rate them in order of importance as they may well
vary between local authorities. Each issue is commented on below.
RESTRAINT ON
CAR USE
Bus patronage was increasing well in advance
of the introduction of the congestion-charging zone in central
London. This upward trend has continued throughout the lifetime
of the charge and clearly the zone acts as a deterrent to drivers.
However, the extent to which these drivers have switched specifically
to buses is not clear. On top of this, the zone covers less than
1.5% of the GLA surface area and patronage is increasing across
the whole of Greater London, where the deterrent is not in operation.
While there is significant restraint on car use in central and
inner London both through parking controls and in a small area,
through the congestion charge, the position in outer London is
different with less car restraint. My understanding is that bus
patronage has also increased here. One can therefore surmise that
other factors are also important. One should also remember that
the London rail system is operating at full capacity for much
of the day. It is also worthy of note that cycling has increased
by 30% since the 7 July 2005 bombs.
THE SYSTEM
IS BETTER
RUN AND
WELL MANAGED
IN LONDON
The delivery chain for the procurement of bus
services is far less complex in London.
Clearly, the benefits of a franchised arrangement
in London, the complicated reimbursement formula elsewhere and
the fact that TfL takes fares risk means that complicated relations
with individual operators are removed. However this is only part
of the issue. The fact that funds are allocated directly from
central Government to London provides revenue security for TfL
to which PTAs are not entitled. This means monies are not under
attack from competing sources and, crucially, provides a borrowing
platform upon which PTAs are unable to stand.
TFL SIMPLY
HAS MORE
CASH
As suggested above TfL's annual revenue budget
massively exceeds that of any metropolitan transport authority
and clearly this imbalance should be addressed. However, the way
funds are allocated is also important. Irrespective of the monies
available, TfL is at a significant advantage purely through its
ability to control funds in isolation of other competing services.
Direct grants are allocated specifically for transport in London
and metropolitan transport authorities should be treated the same.
FUNDING GAP:
LONDON AND
THE REST
PTEG have provided interesting figures on the
significant and growing gap between public spending (combined
Central Government, Local Government and public corporation spending)
on transport per capita as a whole in London compared with the
regions.
TOTAL PUBLIC EXPENDITURE—£ PER
CAPITA ON TRANSPORT[31]
| 1999-2000 | 2000-01
| 2001-02 | 2002-03
| 2003-04 | 2004-05
| 2005-06 |
| North East | 143 | 161
| 154 | 176 | 182
| 184 | 201 |
| North West | 154 | 143
| 165 | 199 | 249
| 267 | 278 |
| Yorkshire & Humberside | 103
| 117 | 142 | 163
| 186 | 184 | 197
|
| East Midlands | 113 | 113
| 132 | 154 | 190
| 207 | 221 |
| West Midlands | 147 | 132
| 155 | 182 | 211
| 231 | 248 |
| Eastern | 157 | 144
| 158 | 166 | 209
| 204 | 221 |
| London | 227 | 233
| 327 | 462 | 586
| 537 | 631 |
| South East | 131 | 133
| 151 | 160 | 186
| 192 | 222 |
| South West | 134 | 137
| 139 | 153 | 180
| 189 | 208 |
| England | 149 | 149
| 177 | 213 | 259
| 259 | 288 |
| United Kingdom | 150 | 152
| 178 | 212 | 262
| 262 | 296 |
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The transport funding outlined in the above table, has been
graphed below to show the difference between per capita funding
for London and the North of England & the West Midlands.
FUNDING DIFFERENCES BETWEEN THE NORTH OF ENGLAND/WEST
MIDLANDS[32] AND LONDON
COST BENEFIT
ON CAPITAL
SPENDING
It is my understanding that capital schemes in London are
approved with cost benefit ratios of considerably less than two.
June 2006
31
HM Treasury, Public Expenditure Statistical Analyses 2006, May
2006 & Public Expenditure Statistical Analyses 2005, http://www.hm-treasury.gov.uk.
pteg spreadsheet has data summary for PTE areas. Back
32
"North & West Midlands" defined as the North East,
the North West, Yorkshire & Humberside and the West Midlands
(region) taken together. Back
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