Bus services after the Spending Review

Written evidence from the Phillip Spick (BUS 20)

Information presented in the following chapters:

1. Call for Evidence - Relevance

2. Passenger Focus

3. Small / Independent Operators

4. Nationwide Operators

5. Competition and Pricing

6. Summary and Close

Call for Evidence - Relevance

1.0 Undertake an independent, frontline sustainable transport development role as Chair of the Estuary Commerce Park Travel Plan Group, representing 13 tenants employing 6000 staff. Principally employed as Travel Plan Manager for one of these businesses – independently promoting sustainable transport initiatives and practice for 7000 employees across the UK. This affords unique insights across the differing spectrum of policy, practice and implementation of the UK bus industry.

1.1 Promotional practice is at times hindered by legislation and regulation that, as I will highlight, often leads to an increased cost to the travelling public, a reduced quality of service, deters patronage through instability and restricts the implementation of cheaper ticketing options for the public.

1.2 Both user and non-user perceptions of the bus industry greatly hinder efforts to reduce our reliance on single occupancy vehicle usage, contributing negatively towards a number of key transport targets for Local Authorities to deliver upon to name but few of the issues of sustainability Government are required to act in a positive, joined up manner.

1.3 Public transport is of the upmost importance for it joins all aspects of society together as one in their motional requirement. Good public transport can only enhance the rating of our current society which the sitting Government wishes to address.

Passenger Focus

‘How passengers’ views are taken into account in planning bus services and the role of Passenger Focus in this area’.

2.0 Passenger Focus is barely referenced by Local Authority / Integrated Transport Authority (ITA) supporting and promotional staff, yet their relevance is of upmost importance. In the same vein, no single public transport users at the 14 UK sites I primarily cover have ever referenced Passenger Focus in 4.5 years in the role.

2.1 Employee experiences and insights have duly been conveyed directly to bus operators / Local Authority and ITA’s, by-passing Passenger Focus, in-turn lessening their ability to influence aspects of bus service provision. Frontline Travel Plan and other independent practitioners require a mechanism with Passenger Focus to input and share customer service and best practice delivery options, e.g. through ACT Travelwise network.

Small / Independent / Community Transport Operators

3.0 Such operators undoubtedly face a multitude of increased pressure from rising fuel expenditure, associated Health & Safety requirements, driver training and improved vehicle efficiencies to name but few of the obstacles to negotiate in the continued aim of providing often critical community supportive services to the public / or part-subsidised critical accessibility services.

3.1 The proposed 20% cut in Bus Service Operators Grant (BSOG) is likely to have a detrimental impact upon the range, quality and variety of service providers and subsequent vehicles able to operate within this field. It will also impact detrimentally on the motional requirements of an aging population and takes away from the table on which the ‘Big Society’ is based. Local Authority funding restrictions are also set to impact on subsidised services to the excessive detriment of societal requirements from 2011.

3.2 The financial squeeze on smaller / independent operators is set to be magnified in certain urban and metropolitan areas, owing to the necessity of the nationwide operators to further streamline. Partnership working (as witnessed in Merseyside between Arriva and Stagecoach on reducing timetabling clashes) and the growing prevalence of Bus Quality Partnerships (referencing Greater Manchester), can but sweep aside smaller operators, taking away their ability to run on high-revenue routes. Removing access to a slice of the profitable bus services that remain, impacts on the quality of vehicles in operation for other routes, placing smaller operators on a rapid downward spiral trajectory. Untargeted BSOG reductions are set to harm overall accessibility levels and the ability of the population to move at relative ‘free will’, and switch to more sustainable means of transportation.

3.3 A cut to BSOG may well see an influx of smaller operators struggling to survive, scheduling services on major routes. Might it be better to direct such operators towards merger and maximising vehicle efficiencies, with Government providing the conditions and parameters for a favourable BSOG rate in-tow to achieve this scaled efficiency?

3.4 At the same time, across UK, conditions exist to provide the framework for the major operators to tender for established routes, or ‘equal’ divisions / segments of cities / metropolitan areas, thereby maximising efficient operation without competition. The travelling public need not be forced into making up the entire 20% fuel subsidy reduction, primarily through noticeably cheaper ticketing possibilities (see 4.4 & 5.3).

3.5 A realignment of legislation may be desirable, but only feasible if smaller operators ‘forced’ from major routes receive a suitable BSOG to maintain critical, supported services. Losing a vast base of smaller operators is not desirable. Any merger / combination, partnership working, sharing / maximising asset efficiency, or branding with community transport operators, the charity transport sector, school buses and services may well see a stronger, more locally focussed, efficient and deliverable smaller operator base. Knowsley Community Transport is an example of such developing practice.

3.6 Such a community transport base might go on to provide a viable opportunity to shape the resources required for aspects of the NHS Ambulance Patient Transfer Service, obtaining additional economies of scale, as required by our changing demographic profile. In the same breath dare we mention the impact of ‘choice’ upon the NHS’ transport impact and future requirements?

3.7 Maintaining societal cohesion, accessibility, critical access for our aging population and younger generation priced away from driving, requires examination of the possibility for maintaining vital rural community lifelines via establishing a favourable BSOG rate for rural services.

Nationwide Operators (‘the Big 5’)

4.0 Bigger does not necessarily translate as stronger and more able to handle a 20% cut in BSOG. As proclaimed by one major operator, profits from the big operator’s respective bus sectors in 2009 roughly amounted to £450m. The 20% BSOG cut amounts to around £430m at 2009 levels. Nationwide operators require profit to reinvest in more modern, attractive, comfortable fleets. The Government requires this of them. More importantly the paying passengers require this satisfaction and mechanism to work, without overly pricing individuals away from bus travel, for example, towards taxi services. How any legislative table can be cleared, together with the shackles of the outdated pre-requisite of ‘enforced competition’ would be overly welcomed by the travelling public to prevent over and above inflation price rises in the coming years.

4.1 A rapid change is being forced upon the major operators, yet as history records, no changes to the legislative operating table are as nearly as quickly implemented, which is set to disadvantage major operators and the travelling public. What will the time lag be between penalising passengers with higher fares and introducing free-functioning legislation based on past changes of 1984, and 13-years of relative foundation stone laying to 2010?

4.2 The benefits of Quality Bus Partnerships are there for the passenger, operator and legislator. They were already present ahead of the announced 20% reduction to BSOG, but ‘slack in the system’ has been allowed to prevail for some time. This era has drawn to a close. Will operators be allowed to function without competition, to enable absolute maximisation of their resources, efficiencies and more to be able to deliver uncluttered, recognisable, stable services, at a current or possibly lower fare than what is set to be introduced when BSOG is reduced? How can a 20% cut be implemented without accompanying changes to operative legislation to mitigate the impact on the travelling, paying public?

4.3 Nationwide operators are of a scale not witnessed ahead of the 1984 watershed, yet they run in competition to one another, struggling to attain market share from each other in many metropolitan areas, towns and cities, resulting in frequent over capacity, and ‘slack-in-the-system’, which is set to be stripped out by the BSOG reductions?

4.4 Where a ‘relative division’ occurs, for example, the vast majority of bus services operated in Northern Manchester is by First Group (with South Manchester being overwhelmingly dominated by branded Stagecoach services and subsidiary brands..), greater efficiencies are possible. This is reflected in First Group being able to offer annual ticketing deals, saving 21% in comparison to a normal monthly ticket. Quite an attraction / stimulant for growing passenger numbers, and worthy of investigating just what impact zero-competition can have upon ticket prices without impacting upon the frequency, standard or delivery of services?

4.5 The division of service operators based on obvious geographical boundaries / partitions (north / south – east / west) is possible across the UK, even where particular divisions may have more obvious, profitable bus routes / sub-urban areas. A tendering process to facilitate such a change of direction would be required. In lean times, perhaps the only competition should be between tender submissions in envelopes and not between half empty buses trawling for passengers that are only able to run thanks to the part state subsidy set to be reduced.

Competition and Pricing

5.0 Unfortunately competition is not viewed favourably. This is not based on pre-1984 perspectives (13 at the time…), but through a variety of observations that, as a front line public transport promoter, and more importantly user, remain a hindrance and barrier to attracting passengers to core bus services operated by the nationwide providers.

5.1 I reference purchasing one particular operators monthly pass, who provide services along a route from a home destination out beyond the core urban area (and where another operator ceases to run) to an edge of city worksite. Yet upon wishing to travel in the opposite direction from that home location for evening or weekend pursuits, all too frequently, a rival operator comes along and doubt is placed in the passengers mind? Do you chance that your operator will turn up on time? Do you make friends and family wait at the bus stop for longer to accommodate your pre-paid travel? I appreciate smart-ticketing will rule out such doubts – but will ticketing be as cheap as a single operator, providing services without competition through a tendering process, as certain operators are prepared to offer in monthly or annualised ticketing? See 4.4 & 5.3.

5.2 In 2009 I was fortunate to witness the introduction of competition to bus services in a medium sized market town (pop^ 95.000, surrounding County pop^ 556.000). Prior to Spring 2009, one nationwide operator handled all services into the town, with discount ticketing options available for monthly, half-year and annual passes. However, the knock-on effects of 2008’s fuel spike came home to roost, resulting in more than noticeable increases to ticket prices (except for individuals insulated through half-year or annual passes until they expired).

5.3 Such rises, and the charge to the nationwide operator by the Local Authority / County Council that service levels were poor considering the scale of operation and resources at their disposal, resulted in the controlling authority seeking to ‘open-up’ established services to competition. The result of this introduced competition was not at all favourable to bus passengers based on the experiences of colleagues I represent:

A - The nationwide operator decided it was no longer viable to operate evening services

B - This left passengers with monthly, half-year and annual passes high and dry!

C - The introduced operator was initially decreed to honour such valid passes from the nationwide operator by the Local Authority / County Council

D - The introduced operator found they too could not viably run evening services, partially due to the level of external passes they were having to honour

E - A 50p surcharge was introduced for external pass holders travelling on the introduced operators evening services – pushing up the price of travel by £2.50 / week (an outstanding increase in annual travel expense of £115 for one colleague)

F - The introduced smaller operators spare resources and driver reserves were not of a sufficient standard to cover emergency situations / breakdowns / driver sickness, with the depot located an unacceptable distance away from where services operated, resulting in the frequent absence of crucial evening services, deterring continued patronage or attracting growth to services – resulting in an additional parking facility lease and expense to business

G - With 550 employees, a site operational from 7am – 11pm, 380 staff on flexible shift or annualised hours contracts, current bus service arrangements are but unhelpful, increasing the cost of travel and preventing the introduction of a ticketing arrangement that would save 6% on the monthly cost of travel in the area (at current rates with competition in services – possibly lower if that competition were not present)?

Summary and Close

· Passenger Focus require greater promotion / visibility to the travelling public

· Small / Independent / Community operators need to merge, pool resources, and look to diversify - but away from developing Quality Partnership routes operated by the big 5 nationwide operators

· A more favourable BSOG is required to assist smaller operators et al who merge in such a way as to provide critical accessibility and community services as part of the big society umbrella of ideas

· Nationwide operators (big 5) require tendering process to bid for area’s / segments in a logical geographical order – to then run without competition (thus reducing costs, in turn reducing unnecessary expense to passengers).

· Legislation required to match the scale and pace of change within the bus industry owing to BSOG and Local Authority funding cuts

· Cheaper ticketing options are available through just the one operator providing services. Evidence that the arrival of competition in 2009 was wholly detrimental to service standards, reliability and price.

To close, apologies for the lack of statistical and financial punch to accompany this evidence submission. Travel Planners do, as a whole, suffer from a lack of the heavy internal facts and figures, which may well be used to help interpret some of the representations from passengers we deal with at first hand. Naturally, frontline sustainable travel promoters do not have to live in fear of the Competition Commission!

January 2011