Memorandum submitted by FirstGroup plc
FirstGroup plc welcomes the Committee's further
focus on bus services in the UK and is grateful for the opportunity
to submit a memorandum.
First we would like to answer the Committee's
specific points in the order they were raised:
HAS DE
-REGULATION WORKED?
The UK bus network is now generally very efficient,
innovative and well-funded, delivering more reliable, comfortable
and efficient services than at the time of de-regulation but at
a fraction of the cost to the public purse. There are numerous
examples of real growth and modal shift in towns and cities in
the UK and in general these are where high quality operators and
far-sighted local authorities have worked together.
Since the Committee's last inquiry, First has:
— developed and introduced a revolutionary
new concept in bus travel, ftr, which offers tram like quality
and reliability at a fraction of the cost of a light rail scheme.
ftr is designed for high passenger volume corridors to be a real
alternative to the car. Already in operation in York with a second
service planned for Leeds in the Autumn, a number of other towns
and cities across the UK are now developing proposals for their
own services;
— continued to invest heavily in new
buses, operations and infrastructure;
— seen passenger growth of 5.5% over
five years especially in areas where we have been able to work
in close partnership with local authorities (eg Leeds, York, Manchester);
— taken advantage of new technology
in the introduction of real time information and ticketing initiatives;
— completed the delivery of the first
commercial city-wide park and ride scheme in the UK (in York),
carrying two million passengers a year. The local authority has
delivered a parking strategy for the City that makes park &
ride particularly attractive. First believes there is scope for
similar schemes elsewhere;
— worked closely with DfT and local
authorities to deliver free travel for senior citizens and within
the current legislation;
— been active in the delivery of several
statutory quality partnerships in the UK;
— developed and implemented region-wide
bus/rail ticketing initiatives;
— encouraged local authorities and
PTEs across the UK to develop quality partnerships;
— continued to promote home to school
transport where First has pioneered American-style yellow school
bus services in UK.
These initiatives have, however, been delivered
despite an environment where:
— Fuel prices, a major factor in bus
operations, have gone up by 170%[1]
since the Committee's last inquiry—indeed 40% in the last
year alone. We had reported then that fuel prices had risen by
74% in the six years since the Committee had reviewed the industry
last.
— Significant increases in the cost
of labour, including maintaining pension schemes and accommodating
changes in employment law.
As a result of these and other cost rises, our
cost base has risen such that fares have had to rise significantly
faster than inflation. Ongoing political clamour for light rail
schemes and for local authority political control of bus operations
has continued in some quarters, at the expense of developing quality
corridors in partnership with operators, a proven factor in delivering
bus passenger growth.
Lack of priority and focus by many local authorities,
and PTEs, on working with operators to develop improved bus services.
Few local authorities outside London are developing
serious proposals for tackling traffic congestion despite being
given Parliamentary powers and being eligible to compete for Transport
Innovation Fund pump priming funding to do so.
IS STATUTORY
REGULATION COMPROMISING
THE PROVISION
OF HIGH
QUALITY BUS
SERVICES?
In general, whilst the bus industry is extremely
highly regulated; from VOSA to the Traffic Commissioners, local
authorities, OFT, DfT, to the HSE and Treasury, there is little
which fetters the ability of operators to provide a high quality
service. Much of this regulation is designed to ensure that minimum
quality thresholds are maintained. For instance, regarding vehicle
design, safety and maintenance, the registration of services,
schedule adherence and good repute among operators. It is further
accepted that there is a need for competition law to apply to
the bus industry. However, local authorities are continuing to
press for greater co-ordination between operators on service frequencies
and common fares. The balance between commercial freedom and competition
law requires further review and First welcomes the DfT's work
in this area.
The reality is that if bus companies are to
be profitable and to grow the market, they have to provide safe,
regular, reliable services on modern, comfortable vehicles, going
where passengers want, when they want and at a price they believe
is fair. Passengers expect no less and if operators do not provide
that, they will soon go out of business and others will take their
place.
ARE PRIORITY
MEASURES HAVING
A BENEFICIAL
EFFECT?
Where bus priority measures are well designed
they have a significant beneficial impact on journey times and
improved reliability delivered through reduced variability of
running times. These in turn can help deliver increased passenger
use. However, bus priority is only of benefit where buses are
adversely affected by traffic congestion or other encroachment
on road space such as parking and delivery areas. The most effective
forms of bus priority are those, which are self-enforcing, such
as bus gates and guided busways. Once bus priority measures have
been introduced local opposition tends to disappear, there are
calls for more widespread introduction in the city and many car
users develop the confidence to use the service for some of their
journeys.
However, delivery of bus priority is hampered
by the local government election cycle across the UK. Introducing
bus priority measures can require difficult decisions from local
authorities. Local residents, shopkeepers, businesses and motorists
often initially resent proposals that reduce either parking/delivery
spaces or road space for cars even though, time after time, examples
from elsewhere can be shown to demonstrate the value of priority
measures.
New proposals can therefore be politically contentious
and, with an electoral cycle that has some councillors up for
re-election every year, are often seen as a political step too
far—particularly in areas with hung councils, small majorities
or particularly opportunistic politicians.
A further factor, which hinders progress, is
the local government structure in PTE areas. While the PTE and
PTA are responsible for the policy, delivery and part funding
of public transport in their areas, they are not the highway or
traffic authority. They therefore have no powers to introduce
priority measures and are often in conflict with the local authorities
they serve which have different spending priorities, differing
local political imperatives as set out above, or are keen to encourage
car drivers and collect revenue from city centre parking.
Given that difficulty the suggestion that they
are given powers to regulate bus services as well can have no
advantage.
Priority measures are arguably the single most
important factor in growing passenger numbers and encouraging
people to leave their cars behind for some of their journeys.
Sitting in a car stuck in a traffic jam on the way to work and
watching the bus speed past you on its dedicated lane is a powerful
influencer, particularly when the bus can also trigger traffic
light changes to give it junction priority. In combination with
improvements in vehicle quality, fares/ticketing initiatives and
improved passenger information, priority can deliver real passenger
growth, as evidenced most spectacularly by the success of the
bus-way schemes in Leeds and Bradford.
FINANCING AND
FUNDING FOR
LOCAL COMMUNITY
SERVICES
This is an area where a radical re-think could
deliver more efficient, cost effective and better targeted services.
There are two elements to this.
Firstly, the provision of new services such
as health centres, community centres, schools etc, should take
full account of the geographical characteristics of the region
and accessibility criteria. Ease of access by public transport
should be of paramount importance.
Secondly, the provision of local community public
transport services, such as social services transport, home to
school transport, socially necessary supported bus services, community
transport, hospital out patient ambulances, staff transport and
local taxi services for school children, the disabled and social
services provide a high degree of duplication by a disparate group
of service providers. Many studies have been proposed to rationalise
the provision of such services and to increase efficiency, but
little has been delivered, and the growth of demand responsive
transport systems provides a further opportunity to explore such
possibilities.
A modern computerised booking and route system
supporting an efficient transport provider could revolutionise
both provision and cost of these services. However, as a caution,
over-specification in this area in the past has diverted funding
which could have been used for service provision itself.
CONCESSIONARY FARES
Scotland and Wales have seen a significant growth
in bus use since their earlier introduction of free local concessionary
bus travel. It is too early to offer any analysis of the impact
of this April's changes in England.
However, there is an important matter of principle
which we are pleased to see has already been addressed. The creation
of a multiplicity of individual local schemes causes potential
confusion for the passenger and undoubtedly requires a great deal
of administration for both local authorities and bus operators.
As schemes have been modified in England from April 2006 under
both the 1985 and 2000 Transport Acts with, in many cases, apparent
confusion by local authorities over how to make such revised schemes,
a great deal of activity has been required by operators to ensure
that they remain adequately compensated under the revised arrangement,
thereby ensuring that the commercial viability of existing bus
services is not threatened. The move to a national scheme in April
2008 should alleviate these problems.
However, whilst it is extremely good to see
the extra mobility that these benefits offer the beneficiaries,
it is important to ensure they are properly funded. Pass holders
often want to travel at the same time as full fare paying passengers.
Unless operators are properly compensated for carrying discounted
passengers, there is no incentive or business case for providing
additional vehicles. At the same time, full fare paying passengers
can be discouraged by being forced to stand on the services they
have used habitually, thus encouraging them to seek alternative
transport.
WHY ARE
THERE NO
QUALITY CONTRACTS?
Quality Contracts were intended as a last resort
where local bus services have failed, and local authorities were
able to demonstrate that there was no other practical means of
implementing their bus strategy. The principal reason why there
are no Quality Contracts is that local bus services have not failed.
Quality Partnerships were always presented as
the Government's preferred policy option, combining an operator's
ability to invest in vehicle quality and service delivery with
the local authority's ability to provide the essential infrastructure
and priority measures to give the services the opportunity to
succeed. This is a proven formula with many notable examples of
success where both operator AND local authority/PTE have delivered
on their commitments. The development of Statutory Quality Partnerships
has provided a greater degree of safeguard for both parties' investments
and such schemes are supported by First; indeed First has been
instrumental in the development of several such schemes with a
view to implementation in due course.
Some bus strategies appear to have been written
in manner favouring Quality Contracts and this is clearly not
the intention of the legislation, it is poor value to the public
purse, and equal passenger benefits could have been delivered
by Quality Partnerships.
Historically, local authority provision of bus
services relied on high levels of taxpayer subsidy and standards
of provision were often poor. Private sector operators are obliged
to succeed to ensure survival, and thereby are incentivised to
grow the market and encourage new users. The overall cost of provision
of a network of services is much lower than when under public
sector control. However, it is accepted that there is more than
can be done in many areas, and action will be taken by operators
provided that they can operate in an appropriate environment.
Whilst some authorities may claim that there
is a need for Quality Contracts as they have been or will be unable
to deliver their bus strategy, this is generally due to a failure
to control traffic congestion and deliver the bus priority measures
to give the bus a chance to succeed. Without those measures buses
are just going to be stuck in the same traffic as everyone else
and there will be no incentive for motorists to make the switch.
Without the potential for growth in patronage, the ability of
operators to invest in quality is drastically reduced. An improvement
in operators' ability to provide a service which is attractive
to the public, in an efficient manner, will grow the market and
permit operators to reinvest in quality, and in improved service
frequencies, thus generating a "virtuous circle" of
growth.
TRAFFIC COMMISSIONERS
A more co-ordinated regulatory system would
be better placed to deliver for the passenger and industry. At
the moment, as indicated above, the HSE, OFT, DfT, Treasury, VOSA,
Traffic Commissioner and local authorities all have a say over
operations.
At present the Traffic Commissioner sets minimum
reliability standards nationally, but operators face a wide range
of traffic conditions where some local authorities are providing
bus priorities and others are not. There should be pressure on
local authorities to provide adequate bus priorities and some
relief for operators where a lack of them causes variable traffic
conditions beyond its control to affect delivery. The Traffic
Commissioner's powers could be adapted to secure better delivery
from highway authorities.
IS LONDON
A SOUND
MODEL FOR
THE REST
OF THE
UK?
Buses perform well in London for a number of
very important reasons. The capital has a mayor who has placed
transport at the top of his agenda and is determined to implement
his proposals despite occasional very vocal opposition. The Mayor
has driven through congestion charging, further extensive bus
priority measures and enforcement at a pace not matched elsewhere
in the UK. He has introduced a comprehensive system of ticketing
that is flexible and easy to use. (See below regarding boarding
times). The special circumstances of London, has allowed him to
invest on a scale which could not be afforded generally in UK.
However, the real reason why the bus has performed
so well in London is the lack of a credible alternative for many
travellers. Not just the congestion charge, but a lack of parking
at both the workplace and, in many cases, the home have led travellers
to rely more on public transport in London than elsewhere in the
UK. Furthermore, severe overcrowding on rail and underground services,
particularly in peak periods, has led travellers to rely on the
bus. The benefits to service reliability, from the reduction in
overall levels of road traffic (from the congestion charge) and
bus priority, have ensured the economic viability of the capital
as buses provide an attractive travel mode, rather than the last
resort which those wishing to travel are compelled to use.
London has achieved very fast boarding times
with a consequent benefit to reliability and is rapidly moving
to being entirely cash free. This has, however, only been able
to be achieved thanks to the increased integrity of the Zone system,
whereby a very high proportion of bus passengers have had their
entry into the Zone permitted by the exit gates of the National
Rail and London Underground stations. This is not the case elsewhere.
These, rather than the regulatory regime, are
the real reasons why London has done so well. It is entirely within
the gift of other local authorities and PTEs to introduce a range
of similar measures. They already have the powers, although in
certain areas lack the political will, and they would be able
to deliver similar results. Overcoming the split responsibilities
between the various agencies responsible for regulation and legislation,
as described above, would go a long way towards facilitating this,
and deliver results quickly, efficiently and cost-effectively.
WHAT IS
THE FUTURE
OF THE
BUS?
The bus can and should continue to be the solution
to transport needs. Bus services are local, accessible, flexible,
affordable and deliverable, and new services can quickly make
a major impact. It has been demonstrated frequently that bus operations
can be adapted rapidly to meet huge surges in demand (eg free
concessionary fares, the 2002 Commonwealth Games) and meet changing
demographic needs. The great majority of local bus services can
be operated commercially without subsidy. It is only on those
additional services and routes that local politicians deem to
be socially necessary that a public subsidy is required.
The bus will, for the medium term, continue
to be the most environmentally friendly vehicle for urban and
rural transport. Having delivered exceptionally reduced emissions
from conventional diesel power, diesel/electric hybrid vehicles
are now coming to the market and we have, in partnership with
our European colleagues, successfully demonstrated hydrogen-powered
vehicles where there are no emissions from the vehicle at all,
and can use renewable power at source.
Bus operators need to continue to maximise their
investment, which ensure that a high quality of service is provided
to the passenger. These include concentrating on service delivery,
investment in fleets that are modern and comfortable, real time
information to remove the uncertainty of bus travel, and new networks
and styles of service (such as the ftr) to keep pace with changing
customer expectations.
However, in order to grow the market for bus
travel and meet the Department for Transport's target of 10%[2]
increase in bus travel outside London by 2010, there needs to
be a new focus locally on tackling traffic congestion and giving
buses more priority.
This can be addressed through demand management,
using combinations of road pricing, congestion charging and parking
policy (reducing numbers of spaces and duration of stay; increasing
parking charges). It also requires development of bus priority
measures. These all require local authority commitment and support,
funding and a desire to work in partnership with operators.
For the longer term, there needs to be a stronger
link between transport and land use planning. It is no good building
out of town shopping centres, hospitals or other major trip generators,
without thinking about the transport links on what may not be
natural bus corridors.
There is also scope to develop new types of
feeder services for outlying estates, feeder or demand responsive
services to link with rail and trunk bus services and others,
which have not been properly exploited in many areas.
In many urban areas we are seeing strong growth
in use of local bus services where operators and the public sector
are working in true partnership. There is no reason why that should
not develop further and be rolled out elsewhere.
In rural areas, the growth in car availability
and use has changed the market. Many rural shops, pubs, post offices
and petrol stations have disappeared through lack of demand, as
larger more centralised facilities have come within the range
of car users. In consequence so have many bus services disappeared.
There is no longer sufficient demand in some rural areas to support
regular bus services, particularly at a time when operating costs
are rising so fast. Local people say they want them but, even
when they are under threat, are not prepared to make enough use
of them to change the economics.
Unless action is taken to arrest falling demand
in many rural areas, traditional bus services cannot be the right
solution. There are many more focussed opportunities (demand responsive
transport, feeder services, community transport, shared resources
with other local transport needs) that can be more relevant to
small communities and at a competitive cost.
23 May 2006
1 Brent Crude Price in $. Back
2
Spending Review 2000 PSA Target (DfT Annual Report 2003-04). Back
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