Memorandum submitted by South Yorkshire
PTA and PTE
This evidence is presented on behalf of South
Yorkshire PTA and PTE. South Yorkshire PTA covers the Metropolitan
districts of Barnsley, Doncaster, Sheffield and Rotherham and
represents a population of over 1.3 million. This evidence supplements
and supports the evidence prepared by PTEG.
BACKGROUND CONTEXT
In South Yorkshire bus patronage has continued
to fall since the 1950s. This is a concern discussed in our 2nd
Bus Strategy, and is reflected across all user groups. Since deregulation
in 1986, annual passenger numbers have dropped from 350 million
to 130 million in 2001 and are currently 111 million. The following
graph illustrates how passenger numbers have continued to fall
in recent periods by different groups of passengers:
Over the same period, passenger satisfaction
has dropped from 58% to 54%. Customer research suggests that passengers'
and potential passengers' greatest concerns are:
— Stability of the network of services.
— Punctuality/reliability.
— Customer service and staff attitude.
Indeed, 80% of our customer complaints are about
one or more of these four issues. Similar concerns were raised
in Sheffield City Council's Bus Commission held in 2005, and by
Councillors at Barnsley Metropolitan Borough Council's Scrutiny
Board. This sets the background against which the Transport Committee's
questions are answered below. In addition, this submission should
be read alongside PTEG's.
1. Has deregulation worked? Are services
better, more frequent, meeting passenger need? Are bus services
sufficiently co-ordinated with other forms of public transport;
are buses clean, safe, and efficient? If not, can deregulation
be made to work? How?
In the opinion of SYPTA/SYPTE the answer is
no, de-regulation has not worked, as evidenced by the passenger
concerns above.
The deregulated bus market is now dominated
by large groups. This in itself need not be inherently bad but
it has led to a small number of groups who have tended to concentrate
investment on the best performing routes and gradually withdraw
the concept of a cross subsidised network. As a consequence, the
PTE is faced with supporting an increasing proportion of the network.
Lack of competition for tendered services has increased the cost
of intervention.
Until recently, around a third of services were
provided by Yorkshire Traction, the largest independently-owned
group. Their takeover by Stagecoach has improved integration with
the tram but further reduced the number of companies in the market.
Elsewhere integration is almost non-existent and integrated fares
are forced too high to be popular.
In South Yorkshire the two main operators, First
Group and Stagecoach, operate 95% of the services. There are 12
other operators. At the time of deregulation there were over 60.
Acquisitions and competition have driven this reduction. The following
table illustrates in more detail the effective monopoly position
of the two dominant operators in each of the four South Yorkshire
Districts. Indeed, in Barnsley it is not unusual to only receive
tender submissions from Stagecoach (ie formally from the Yorkshire
Traction Group of companies).
| Barnsley | Doncaster
| Rotherham | Sheffield
|
| First | 1.4% | 64.8%
| 64.9% | 81.9% |
| Stagecoach | 95.6% | 21.3%
| 29.4% | 16.1% |
| Other | 3.0% | 13.9%
| 5.6% | 2.0% |
| | |
| |
Without competition, the major operators are now concentrating
their services on main roads at the expense of penetration into
adjacent communities. This improves financial performance but
at the expense of a network. As the following graph illustrates,
they are operating less and less miles commercially each year.
In turn the PTE is being asked to finance those socially
necessary services to sustain a wider network. Commercially operated
miles have decreased by 20% over the last five years and even
though tendered or subsidised services have increased by 100%
over five million, bus miles have been lost to passengers in the
same period. The impact on the PTE's budget has been significant.
It has increased its spend from £5,947K to £9,232K,
an increase of 55%. Our levy income rose by less than 20% over
the same period. This increase cannot be sustained and because
operators' deregistrations are accelerating the PTE is already
unable to buy back services like for like. This means there is
always a reinstatement tension. The operators walk away from commercial
bus services without community consultation or feelings of obligation.
The public call for their reinstatement and the PTE has to prioritise
which (if any) bus services it can afford to buy back. This leads
to instability in the bus market. The extent of service withdrawal
has created a loss of confidence by the travelling public which,
in turn, leads to an increased dependency on the car and the decline
in passengers. Market stability and improved bus quality is needed
to grow bus patronage. This has been the case in London.
In South Yorkshire, where transforming the economy is a high
priority, bus services are needed into areas of economic development
from day one. Bus operators are reluctant to take a long-term
view of such services and thus it also falls to the PTE to provide
financial support—often for periods of four to five years
to establish their viability. Apart from the recent improvements
in integrating with the tram there has been little integration
with other public transport modes commercially.
Since 1986 service levels, frequency and coverage have declined.
Patronage and satisfaction have consequently declined. Chasing
this spiral has led to real rises in fares. For example, First
Group single fares in South Yorkshire have changed as follows:
— two mile fares up 200% since 1999;
— all fares up an average by 168% since 1999; and
— three to four mile fares up 36% in 2005 with three
rises all fares up on average 30% in 2005 with three rises.
In short, deregulation has not delivered a better bus service.
2. Is statutory regulation compromising the provision
of high quality bus services?
Yes, in some areas. The inability to provide co-ordinated,
fully branded bus services with integrated timetables, real-time
information, with attractive and affordable multi-modal and multi-operator
ticketing (including smartcards) is a barrier to growth. As shown
above there is little competition between bus operators. However,
there is competition with the car. Yet competition legislation/rules
are being used to restrict co-operation between the dominant operators.
This makes it impossible to compel operators (who put their local
business case above wider passenger benefits) to participate in
area wide publicly funded schemes.
If this was addressed, and the PTEs granted additional powers
to co-ordinate services (routes and timetables) and fares in an
environment where service stability was guaranteed (ie you could
be sure the service would operate for a number of years on the
same route, days, time of day and frequency) and the ability to
compel operators to participate in smartcard and real-time schemes,
then we would have the platform to move forward.
In South Yorkshire, we have little influence over service
deregistrations, yet if we place a contract for a service to meet
social needs the operators are quick to argue abstraction from
commercial services (they have for the service A3 and 348/9 in
Sheffield for example). This means we have to divert supported
services onto less attractive routes to minimise the risk of abstraction.
This is not the best use of public funds and allows commercial
operators to dictate the network regardless of public need. Open
co-operation would be likely to lead to better use of funding.
Statutory Quality Partnership Schemes can enforce quality
standards in relation to vehicles and some aspects of their operation.
To that extent, they are useful and a Statutory Quality Partnership
Scheme is being promoted in Sheffield. However, there is no guarantee
that services will continue to be operated along an SQP route
nor can service levels or fares be specified. We can require participation
in a ticketing scheme but cannot specify fare levels.
3. Are priority measures having a beneficial effect? What
is best practice?
Yes, priority measures can have a benefit. Across South Yorkshire
we are investing significantly in improving reliability. We liaise
with other PTEs and Local Authorities to transfer best practice.
However, the willingness of Highway Authorities to invest can
be undermined when there is lack of confidence in the quality
of the bus service being delivered.
Proper enforcement of car parking and bus lanes is also important.
When decriminalisation of car parking enforcement was introduced
in Sheffield in April 2005, it coincided with a step-change in
bus punctuality. It rose each month from 85% of services within
the Traffic Commissioners -1/+5 minute window, to 91% by July
2005. In terms of journey time improvement and reliability, bus
priority measures can have an important role in improving bus
service performance. Priority measures, along with better quality
buses, customer care measures (including bus stop upgrades) and
promotion of the local network, can lead to patronage growth.
They are, however, only part of the solution. Patronage growth
is not only dependant upon journey predictability (achieved through
enforcement as well as priority measures), but also on a network
designed to meet modern travel patterns.
In South Yorkshire the Wickersley-Worksop Quality Bus Corridor,
which included the above package of measures, generated a 4% patronage
growth and a 5% saving in journey time in its first full year
of opening. This shows that bus priority can work. However, in
North Sheffield the PTE, in partnership with First and Sheffield
City Council, devised a package of improvements, the initial phase
of which was a network change aiming to provide local people with
access to key facilities. This was introduced before bus priority
works and even with the same bus resource generated a 3% patronage
growth, compared to a fall in most other parts of the City. The
priority measures are currently being installed, from which we
expect further growth.
4. Is financing and funding for local community services
sufficient and targeted in the right way?
In the opinion of SYPTA/PTE the answer is no. As has been
demonstrated above, the cost to the public sector of buying back
services which commercial operators seek to abandon is not sustainable.
The cost of tender renewals are rising by 14-15% each year—above
annual RPI increases. Operators claim bus costs are increasing
at 4% above inflation annually. Services are funded by local taxation
which is constrained by Government spending limits. In the medium
to longer-term it is becoming harder to find the efficiency savings
to meet these rising costs. In short, to deliver the high quality
public transport network necessary to achieve local and national
objectives, the total funding needs to be increased. Voluntary
Partnerships have so far failed to deliver a basis for securing
sufficient funding. Hence, the interest in Statutory Quality Contracts
and enhanced SQPs.
There has also been an added problem with three-year funding
initiatives for bus services, requiring innovation. The lessons
have been learned from Urban and Rural Bus Challenge, and Kickstart
was welcomed. However, all these important funding streams which
encourage market growth have been abandoned. Government needs
to replace them with a permanent funding stream for local bus
services.
5. Concessionary fares—what are the problems with
the current approach? Does the Government's proposal to introduce
free local bus travel across the UK for disabled people and the
over 60s from 2008 stand up to scrutiny? Should there be a nationwide
version of London's Freedom Pass—giving free or discounted
travel on all forms of public transport?
The current approach provides a substantial statutory entitlement
for elderly and disabled people. The entitlement for children
and eligible students is dependent on the concessionary travel
authority and the generosity of the schemes varies considerably.
Even for elderly and disabled people, the extent of the geographical
area covered by their concessionary fare entitlement and the extent,
if any, of provision over and above the statutory minimum varies
considerably. There are also other groups of people for whom,
on grounds of addressing social exclusion, there might be a stronger
case for providing subsidised travel than many people currently
receiving such a benefit, but who are not covered by concessionary
fares at all. The PTEs in particular have no powers to fund concessions
for groups such as those seeking employment.
The additional funding provided to introduce free concessionary
fares is significant. For example, SYPTE's concessionary fares
budget has almost doubled. Although it provides for a universal
benefit for eligible people, in practice, it tends to be targeted
more on those who may need it most since take up and the amount
of travel will be greatest amongst those who do not have access
to private cars. It will also increase bus patronage. Although
there are benefits to the bus industry in increasing the customer
base, free fares should be seen as an issue of social policy rather
than transport policy.
South Yorkshire welcomes the Government's intention to make
the local scheme a national one but is concerned that it will
be confined to buses. Locally, we have a scheme that includes
local rail and tram journeys. Our scheme is also available from
9.00 am which is helpful to people visiting hospitals and health
centres. We would not wish the ability to fund these extensions
locally to be lost. We also believe tram schemes should be included
in the national scheme.
In the event that a Quality Contract were to be introduced
in the context of a national concessions scheme, then the funding
for concessions should be provided to the Transport Authority
so that best value could be provided as part of the overall contracting
process.
6. Why are there no Quality Contracts?
There are a number of reasons why Quality Contracts have
not been introduced. SYPTE is doing a lot of work on this delivery
option and is happy to explain in detail the barriers.
The reduction in lead timescales for Quality Contracts was
helpful in reducing the risks of introducing Quality Contracts.
However, there are still considerable risks associated with progressing
Quality Contracts and the earliest one could be delivered is 2009,
given the risks set out below. SYPTE is at the forefront of understanding
these risks and examining in detail how a Quality Contract might
be brought forward. A key part of this understanding was the joint
"Market Consultation Exercise" undertaken with Nexus.
The lessons arising from this work will willingly be shared with
the Transport Committee. Key barriers SYPTE have encountered in
progressing Quality Contracts include:
— Local operator opposition—it is notable
that both Stagecoach and First (the two dominant operators in
South Yorkshire) declined to participate in the "Market Consultation
Exercise". This makes it difficult to predict how they might
respond to a Quality Contract, but at the very least legal challenge
is expected. This continues to ignore the concerns expressed by
the 2002 Inquiry which criticised bus operators for their "negative,
unhelpful and misguided" approach to Quality Contracts. On
the other hand, other operators (eg Fraser Eagle) have gone public
on their support for Quality Contracts and the work SYPTE is undertaking
to explore the merits of a Quality Contract.
— Market collapse—once a Quality Contract
has been approved, there is the risk that the existing operators
(if unsuccessful) might walk away from the network and effectively
collapse the market.
— Costs—since there is no Quality Contract
in existence, and the local operators refuse to provide patronage
and revenue data for local commercial services, there is uncertainty
about costs. A risk which the Local Authority/PTE promoting the
Quality Contract would have to bear.
— Pensions—Under Secretary of State approval
the "closed" SY Passenger Transport Pension fund was
created through a management buy out, the guarantor is SYPTA Ltd,
not First Group plc who bought out the management run company.
Six hundred First manual workers are part of the scheme and there
are significant cost risks if either First Group does not win
a contract or TUPE applies.
— Engagement—the DfT has been slow to engage
in discussions on how a case for a Quality Contract might be brought
forward for the Secretary of State's consideration. Only recently
have they begun to discuss how a case might be presented or, indeed,
give clear or comprehensive guidance on its content. For an Authority
to stand any chance of making a successful bid it must know the
information the Secretary of State requires to make his decision.
— Process—the legislation still requires the
legal test of "only practicable way". It has been widely
stated that bus operators will challenge the legality of a Quality
Contract proposal. This adds risk to timescales and costs. This
has been acknowledged by the Public Accounts Committee in their
May 2006 report on Bus Services. Whilst the guidance sets minimum
timescales for the Secretary of State to respond, early Quality
Contracts are likely to take longer. Given this, and the reluctance
to engage, PTAs believe such powers could be delegated to them
to reduce timescale uncertainty and thus cost risks.
— Implementation—the Transport Act 2000 would
not easily allow a whole South Yorkshire Quality Contract Scheme
to be approved and implemented over a reasonable timescale, ie
two years. The legislation only allows three months from making
the scheme to tendering. If the case is countywide, either tendering
would have to be almost simultaneous (which raises risk and capacity
issues) or there would have to be separate applications for parts
of the county.
— Contract length—the "Market Consultation
Exercise" has suggested the contract length would be more
ideally placed at eight years. This would bring about cost savings
linked to infrastructure investment (especially bus depreciation
costs). Eight years is in line with recent Government changes
to conventional bus tenders. The Transport Act sets a maximum
of five years.
— Vehicles—There is a limited market supply
and a five year contract is not cost efficient. Significant savings
could be achieved with a longer contract period or with PTEs being
able to own vehicles themselves.
7. Are the powers of the Traffic Commissioners relevant;
are they adequately deploying the powers and resources that they
currently have? Do they have enough support from Government and
Local Authorities?
Yes, the powers appear adequate and the work of the Traffic
Commissioners is supported. However, there is concern that they
are under-resourced to fully carry out these roles and liaise
more effectively with public bodies like PTEs. For example, South
Yorkshire had recently to provide them with resource to carry
out a major scrutiny of bus punctuality and reliability.
8. Is London a sound model for the rest of the UK?
London has seen growth in bus patronage. In South Yorkshire
there is currently not the level of public funding available to
replicate this model but there are other transferable lessons.
Their ability to specify services levels and allow competition
off-street has been backed by other measures including powers
of highway management and significant investment in new buses.
In theory (at least) the Quality Contract model brings the rest
of England closer to the London model as it offers the ability
to tackle the following customer-led concerns:
— Stability—a Quality Contract allows a network
to be guaranteed for the five year contract period, with changes
(if any) subjected to local consultation.
— Fares—fares can be set to grow custom and
not maximise revenue income Rises can be restricted to annual
increases linked to actual rises in bus operating costs, and a
strategy for peonage growth rather than linked to profit targets.
— Quality—can be delivered through specifying
better buses, as in London, insisting on an appropriate customer
care qualification for drivers, and specifying high quality maintenance.
— Network design—this can strike a balance
between maximising passenger volume, and accessibility for passengers.
— Confidence—this will give public authorities
confidence to invest in priority measures knowing the services
will not be withdrawn from the facilities. In addition, they will
have a greater incentive to invest given the additional ownership
of the risks.
The problem, as Section 6 identifies, is the transformation
from the present basis to a franchised network.
9. What is the future for the bus? Should metropolitan
areas outside London be able to develop their own form of regulated
competition? Would this boost passenger numbers? If not, what
would? Does the bus have a future? In addressing rural railways,
the Secretary of State has said that we "cannot be in the
business of carting fresh air around the country"; is the
same true for buses?
The future for the bus should be good.
South Yorkshire's vision for its social and economic development
requires the provision of high quality public transport to meet
an increasing proportion of people's travel needs. The congestion
that would result if increasing travel demands were to be met
by an ever higher proportion of travel being made by the private
car would be unacceptable environmentally and would, in any case,
ultimately tend to stifle economic growth. Buses have to play
a strong role. To achieve their full potential requires local
Transport Authorities to pursue a range of policies only some
of which are under their control. As our evidence acknowledges,
it requires Local Authorities to commit to clear policies to manage
demand for travel and where necessary reallocate road-space. It
also requires a stable and growing network of attractive and affordable
bus services that passengers will choose to use. It is this combination
in London which has significantly contributed to the growth in
patronage, whereas the present approach in South Yorkshire of
voluntary agreements has yet to deliver such a network. Uncertainty
over the ability to deliver it could undermine the commitment
to the necessary highways, traffic and parking policies.
We believe the ability to be able to co-ordinate the services
of different operators, introduce simple integrated fares and
ticketing and promote the full range of public transport as a
single stable network is essential. It will enable other policies
to be implemented, enabling growth and thus improving the funding
and financing position of bus services.
We recognise that and different solutions will be necessary
in different parts of the country. That is why we believe the
Local Authority and/or PTA/PTE are best placed to judge the most
appropriate policy options and how to maximise value for money.
In South Yorkshire we are in parallel developing potential proposals
to introduce Quality Contracts, also consulting on and evaluating
alternative partnership arrangements that might deliver the bus
strategy outcomes. Much is being placed on the role of enhancing
and strengthening Quality Partnership Schemes by the industry.
The challenge in any enhanced Quality Partnership is binding the
partners in a stronger way than present partnerships do and embracing
aspects such as ticketing, fares, frequency and service levels.
Quality Contracts have the advantage that they are already provided
for by existing legislation. However, as the Public Accounts Committee
recently acknowledged, the Select Committee has also recognised
in the past and as set out in this evidence, that is a process
with significant cost and timescale risks. Enhanced Quality Partnerships
may be possible by changes in the Office of Fair Trading's approach
and by guidance. However, if it requires legislation it must be
introduced quickly before the demand for bus travel further deteriorates.
In summary, South Yorkshire supports the requirements identified
in the PTEG evidence, namely:
— a more flexible and locally-determined menu of
options including Quality Contracts from which to serve passenger
needs;
— significant revisions to the Quality Partnership
Scheme and Quality Contract legislation to enable cost-effective,
local solutions to be implemented;
— a wider recognition of the needs for better bus
priority, stronger parking policies and, where appropriate, road
pricing solutions, with possible unification of public transport
and strategic highway responsibilities, where this is the preferred
local solution; and
— a funding package which encourages and rewards
all parties for adopting policies which raises the quality of
delivery and grows the market for bus travel.
23 May 2006
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