Memorandum submitted by National Express
Group plc
National Express Group PLC (NX) welcomes the
Transport Select Committee's latest inquiry into "Bus Services
Across the UK". The bus is the backbone of public transport
in the UK, with some 65% of all public transport trips per person
per year made by local bus (National Travel Survey, 2004), compared
to just 21% for rail travel. Providing high quality bus services
across the UK is therefore of paramount importance.
NX believes that the on-going debate about bus
policy, principally between the operators on the one hand and
the Passenger Transport Authorities and Executives on the other,
needs to be brought to a conclusion so that all parties can concentrate
on what is most important, namely providing and improving bus
services for the person that counts most—the passenger.
NX is committed to working in partnerships with both local and
central government, and the PTEs, to deliver quality public transport
and thus grow the bus market.
NATIONAL EXPRESS
GROUP BUS
DIVISON
NX is the major bus operator in the West Midlands,
through its subsidiaries Travel West Midlands and Travel Coventry
(TWM). It also operates Travel Dundee, Scotland's fourth largest
urban bus operator, and provides bus services in south and south
west London through Travel London.
As at the end of 2005 NX's bus companies:
— employed over 7,000 people;
— operated over 2,200 buses;
— operated over 90 million miles a
year; and
— carried over 300 million passengers
a year.
Through employee surveys and more formal development
reviews, NX has an active programme of engagement with its employees,
many of whom are shareholders in the company, to understand their
needs and to monitor employee satisfaction levels. Strong relationships
have been developed with trade unions, leading to long-term pay
deals and no company-wide strikes across the entire NX bus division
throughout all NX's years of operation in the industry.
NX also actively engages with its customers
to monitor their needs and levels of satisfaction, and we undertake
regular qualitative, quantitative and mystery shopping surveys
to monitor standards.
This submission seeks to address the terms of
reference for the inquiry in so far as they relate to the individual
bus companies. Issues of more general policy, while touched on,
are left for the Confederation of Passenger Transport UK, the
bus industry trade association, to address.
HAS BUS
DEREGULATION WORKED?
NX believes emphatically that, overall, bus
deregulation has been a success and, developed by the Quality
Partnership regime established by the Transport Act 2000, can
deliver significant improvements to public transport. Although
the decline of bus patronage since 1986 is often attributed as
a failing of deregulation, it is important to note that patronage
was already in decline before then.
The reasons for this decline are clear. First,
there has been a significant increase in car ownership across
the UK, including the West Midlands. Census results show that,
over the last 20 years, the number of households with access to
a vehicle in the West Midlands has jumped by more than 10%. Second,
there has been a lack of sufficient bus priority measures to ensure
that the bus can provide journey times at least as fast as the
car.
Nevertheless, where operators work in close
partnership with local authorities, with clear obligations on
both sides, there is strong evidence that deregulation works and
can achieve a growth in patronage.
Indeed, in our two operations outside London,
of which TWM is by far the largest, there is clear evidence that
partnerships do lead to a growth in patronage and to real private
sector investment, as this submission seeks to demonstrate. But
not enough of these partnerships, statutory or informal, have
been formed in order to stem the overall decline. The following
two sections will address these issues.
(a) NX's role in the West Midlands
and Dundee
NX believes its record speaks for itself, as
outlined below:
(i) Investment
On investment, NX has:
— invested £85 million since 2000
in new buses, and since 1995 has bought 1,371 buses at a cost
of around £185 million;
— as a result, by 2009 NX's entire
bus fleet will have been replaced with new low-floor, easy-access
buses, six years ahead of the DDA requirement for low floor vehicles;
and its double deck fleet will have been replaced seven years
ahead of the same DDA requirement;
— considerable investment has been
made in depots, passenger information, security and driver training
(over 60% of drivers in TWM have an appropriate NVQ), market research
and other initiatives that emphasise the value NX places in both
customers and employees;
— NX's partnership with the West Midlands
Police, with a significant investment programme, has led to a
reduction in assaults on drivers by 29%, a reduction in thefts
by 25% and a reduction in robberies of 9% between 2004 and 2005.
Since NX acquired Tayside Public Transport Company
Limited in 1997 (re-named Travel Dundee), the entire fleet had
been upgraded to low-floor, easy-access buses at a cost to NX
of nearly £14 million.
NX's significant investment in new buses has
resulted in cleaner, less polluting fleets and all buses in Dundee
and London are now equipped with CCTV. In the West Midlands, some
3,100 CCTV cameras have been installed across the fleet, backed
up by considerable investment in surveillance and on-board "CrystalEyes"
viewing screens.
(ii) Network coverage, cost and fares
NX continues to provide a comprehensive network
of routes in the locations it serves. TWM runs some 70 million
bus miles each year, the same level as was operated before deregulation.
68% of buses operate on corridors which have a frequency of 10
minutes or less and almost 90% of the population in the West Midlands
is within 250 metres of a bus stop.
This network is being maintained at largely
private risk: the subsidy bill for the West Midlands bus network
in 1985 was approximately £40 million (in today's terms),
but today it is just £6 million. Currently, 97% of TWM's
network is commercially operated. In addition, the real cost per
tendered kilometre has reduced by 31% in the West Midlands since
deregulation, so providing real value for money on those tendered
services.
With a Government focus on integrated transport,
TWM's network is also fully integrated with other public transport
modes and it is now possible to buy rail tickets on TWM buses—something
that would have been unthinkable before 1986. A whole range of
integrated tickets are now available to TWM's customers.
Our approach to fares, meanwhile, is designed
to encourage increased patronage. The policy of simplification
has ensured that fares are changed just once each year, in January,
to co-ordinate with local rail revisions, whilst across the West
Midlands the number of fare bands has been cut to just two. The
top rate flat fare, of £1.20 across TWM services in Birmingham
and the Black Country, and £1.10 in Coventry are amongst
the cheapest in the country. Similar value for money fares operate
in Dundee.
(iii) Working in partnership: patronage growth
and bus service improvements
All the evidence indicates that where operators
are able to enter into quality partnerships with local authorities
and PTEs, patronage does increase, sometimes significantly. For
example, since 1997 TWM has entered into quality partnerships
with Centro and Birmingham/Coventry City Councils on the following
routes, with impressive increases in patronage:
— on Line 33 (Birmingham to Pheasey),
patronage increased by over 30% between 1997 and 2002;
— on SuperLine 301 (Walsall to Mossley),
patronage increased by nearly 15% over the same period;
— on Route 67 (Birmingham to Castle
Vale), patronage increased by 33% over the same period;
— PrimeLine route 17/27 (Coventry to
Walsgrave Hospital), has seen patronage increase by 13% between
2002 and 2005. In addition, two further PrimeLine routes in Coventry
saw significant passenger growth between 2004 and 2005, reflecting
heavy investment from both Travel Coventry and the local authority.
As part of these quality partnerships, NX committed
to extensive investment in new fleet and improved driver training
in return for which the local authorities introduced bus priority
measures and appropriate infrastructure.
Elsewhere within the Group there is strong evidence
of the benefits of working in partnership with local authorities.
In Dundee, in September 2005, our Travel Dundee operation committed
to signing a statutory Quality Partnership with the City Council.
In essence this requires Travel Dundee to:
— Continue fleet improvement.
— Continue provision of 100% easy access
vehicles.
— Focus branding and marketing, working
with the Council to promote the Smart bus concept.
— Review the existing network with
the aim of enhancing service provision and reducing passenger
wait times.
— Improve driver training in customer
care and disability awareness.
In return, the City Council, with financial
support from the Scottish Executive, will deliver:
— Road improvements which benefit bus
passengers (specifically bus priority).
— Improved enforcement of bus lanes
through decriminalized parking and camera enforcement.
— Real time information both at bus
stops and through mobile phones.
— Generally, a proactive approach to
new ideas and concepts.
Already since the statutory Quality Partnership
process was commenced, the indications are that passenger numbers
have stabilized, an impressive record given the rapidly increasing
levels of car ownership in the city of Dundee. Indeed, there has
been an 11% jump in car ownership levels in the City between the
last two Census surveys.
(b) The role of local authorities
Despite these successes, there are areas where—in
the West Midlands—the local authorities have not shown a
similar level of commitment towards improving the bus network.
Birmingham City Council was a critical partner in providing bus
priority measures on the Route 67 quality partnership, for which
NX invested around £4 million in a fleet of articulated,
low-floor vehicles. Sadly, a change of political control resulted
in the Council being less convinced of the value of bus priority
measures. So just as a statutory Quality Partnership for this
route was on the point of being signed, the Council decided to
suspend the bus lane, and this suspension remains today.
Across the West Midlands, other initiatives
to achieve patronage growth have been thwarted in a similar manner.
For example, bus rapid transit proposals along the Bristol Road
in Birmingham (a congestion hot spot) were developed jointly by
TWM, Birmingham City Council and Centro but again the change in
political control curtailed the project. Meanwhile, on the Outer
Circle No 11 route in Birmingham, despite major investment by
TWM, the promised significant bus priority measures that would
have increased bus speeds by an estimated 10% have not been delivered.
Meanwhile, NX has been committed to such improvements.
Indeed, in 1999-2000 TWM offered the Council's Central Implementation
Team £30 million for investment in bus priority measures,
but only £2 million has been taken up.
Currently, in the West Midlands, just 5% of
the primary road network has bus priority measures. If local authorities
were willing to provide more bus priority measures, NX is confident
that it would be able to grow bus patronage in the conurbation,
based on its experience of the route specific quality partnerships
that already exist.
To NX it is clear that it is how the road
space is managed that is the primary factor in encouraging
an increase in bus patronage, not whether or how the bus industry
is regulated. There are enough examples across the country
to show that where a local authority has the political will to
provide bus priorities and make partnerships successful, operators
do respond and deregulation clearly works.
CONCESSIONARY FARES
The extension of the existing concessionary
scheme to allow free travel across the country and not only in
the holders home local authority, is the ideal opportunity to
standardise reimbursement mechanisms and rates. Such a change
would also reduce the costs currently incurred within individual
local authorities due to duplicated bureaucracies. The model and
the associated reimbursement rates which has been operating successfully
in Wales for a number of years, and introduced in Scotland in
April 2006, appear to sufficiently robust to allow easy extension
to England in 2008. As an additional comment, it is important
to note that the concessionary fare payment made by Centro is
a subsidy to the passenger and not to the operator. The operator
receives payment for the fare the OAP would have made less a discount
factor. Thus TWM actually receive approximately £0.66p for
every £1.20 ticket that would have been sold to a concessionary
fare passenger.
TRAFFIC COMMISSIONERS
Traffic Commissioners do have the appropriate
powers to ensure the appropriate level of regulation of the industry
but it could be suggested that increased resources would allow
a more pro-active approach to the policing of the very small number
of poor and low quality operators.
IS LONDON
A SOUND
MODEL FOR
THE REST
OF THE
UK?
London, clearly, has achieved significant patronage
growth in recent years. The approach for London was the right
one, and has been successful. However, NX does not believe that
London provides a model for the rest of the UK. It has a number
of different characteristics which are not replicated anywhere
else in the country, and London's success has come at a significant
cost.
First and foremost it has a different government
structure, with a Mayor with considerable powers and financial
resources. The Mayor was able to introduce the congestion charge
and Transport for London has taken a deliberate policy of discouraging
car use through a range of bus priority measures as, critically,
TfL has control over parts of the highway network in a way that
the PTAs and PTEs do not.
Political commitment, combined with power and
control over the highway, mean that the comparison that is often
made between the success of London compared to declining patronage
overall in the UK, as a way of promoting the case for regulation
outside the capital, or for the introduction of Quality Contracts,
is therefore not a valid one.
In any event there is much debate about the
financial cost to TfL for its investment in the bus network. As
the London Assembly Transport Committee report of March 2006 has
noted, costs have risen faster than revenues. The TfL subsidy
to London Buses has increased from zero in 1997-98 to £555
million in 2004-05 to meet the estimated £1,400 million costs
of the contracts tendered by London buses. As this Committee therefore
noted, the improvements have come at a large financial cost.
Given inevitable financial constraints on public
expenditure, outside of London, the private sector operators are
therefore an essential partner with local authorities and the
PTAs and PTEs in the investment in, and the provision of, bus
services.
WHY ARE
THERE NO
QUALITY CONTRACTS?
NX believes that the reality is that it is difficult
for any local authority or PTE to prove that a Quality Partnership,
where it exists, has not worked. NX's experience is that they
do, as indicated above. This experience is based on what has been
achieved in the West Midlands, not simply in a small number of
"shire" towns. But equally important is the failure
of PTEs to actually try the Quality Partnership approach.
NX firmly believes that more needs to be done
to develop the Quality Partnership approach rather than to use
the Quality Contract route. The reality is that a Quality Contract
would have a number of downsides. Chief of these would be the
massive uncertainty that the industry would be thrown into, with
no guarantee or even indication that the new system would deliver
better results than the current system. Moreover, there would
be the distinct possibility that, like many structural reforms,
delivery to the passenger or user would be less satisfactory.
Equally, employees are any public transport
operator's most valuable asset, and it is these people whose jobs
and pensions would be thrown into question. Finally, the level
of financial risk local authorities/PTEs would be exposed to would
rise significantly.
It is also unclear whether the local authorities
or PTEs would have the skills or resources to manage a Quality
Contract regime. They would certainly need to resource up to manage
such a regime, at some cost. By contrast, current operators are
dedicated to serving customers rather than simply planning to
a pre-prescribed contract that may not serve the best interests
of the paying public.
The reality is that the deregulated bus market
is now a mature one, and unpicking it now would be disruptive
for no obvious gain, given the improvements that are already being
secured in quality partnership agreements, and elsewhere throughout
the industry. Indeed, it is unclear what public policy objectives
would be secured through a Quality Contract that cannot be secured
by a Quality Partnership.
WHAT IS
THE FUTURE
FOR THE
BUS?
NX believes emphatically that there is a very
strong future for the bus and every opportunity to grow passenger
numbers through working in partnership.
Although this submission has pointed to a number
of initiatives taken by NX to develop its bus market, it is far
from complacent. NX recognises that it needs to constantly strive
hard to drive up its performance and provide a level and quality
of service that encourages more people to travel by bus and leave
their cars at home.
To this end, NX is committed to a continued
investment programme and our new Premier 997 service in north
Birmingham, which has seen 20% growth since its launch in 2005,
is clear evidence of this. We will also continue to invest in
new buses and new technology, with the roll out of automatic vehicle
location equipment and mobile phone based real time information.
Indeed, our bus businesses depend upon meeting passengers increasing
expectations.
Clearly more needs to be done if, across the
UK, we are to reverse the general national trend of decline. But
there are more than enough examples, not simply outside the metropolitan
areas but within them, where true partnership with local authorities
can and does work.
The fundamental change required, NX believes,
is that the PTAs and PTEs should be given control over the highways
to ensure that proper priority can be given to the bus, and so
that bus priority measures can be properly and rigorously enforced.
Indeed, NX's experience in Dundee—where the local council
has the capacity to implement road enforcement measures—has
proved highly beneficial to Travel Dundee in certain key locations.
It is undoubtedly a problem that while the PTAs and PTEs have
responsibility for promoting the bus, they do not have the full
range of powers to facilitate this - in particular the management
of the road space.
In addition, NX believes that the introduction
of a demand management system in many of the more congested conurbations
would help considerably in freeing up road space and enabling
the bus to provide a more reliable—and therefore more attractive—service.
The experience of London does clearly indicate that a congestion
charge, combined with effective bus priority measures, does facilitate
a growth in bus patronage, and would be welcomed in the West Midlands.
For the future, NX is committed to working in
partnership with local authorities and PTEs to develop and improve
the bus market.
The key issue is how the road space is managed
to enable the bus to provide a faster and more reliable service
and if local authorities were to commit to more bus priority measures—and
to their enforcement—then the future of the bus is a very
positive one.
NX believes that if these issues can be addressed
the barriers to improved bus performance, leading to patronage
growth, will be overcome.
May 2006
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