Bus services after the Spending Review

Written evidence from the Association of Transport Co-ordinating Officers (ATCO) (BUS 48)

Introduction

1. The Association of Transport Co-ordinating Officers (ATCO) represents officers in county, unitary and metropolitan authorities across the UK. Our members deal with policies for, and the promotion and procurement of, public transport services and the co-ordination of all modes of public passenger travel, including concessionary travel, within the context of the wider transport agenda. We are pleased to offer our views on the above consultation.

2. The following views have been assembled by the Association’s Bus Executive whose members have sought views from colleagues in the region that each represents.

3. In terms of the Association’s working practice, this response therefore represents ATCO’s formal position.

Background

4. ATCO understands that whilst reductions in local government spending are inevitable in the current economic crisis the Association is concerned that the Comprehensive spending Review will have an extremely negative impact on local bus services. This impact will be especially harsh in rural areas where many services are operated on a marginal basis and where subsidy by local government is necessary even to maintain a bare skeletal network.

5. Many authorities have now established integrated transport groups and units which serve to coordinate the various strands of local authority transport. Past arguments concerning local authorities placing themselves in a poor position through lack of guile and administrative skill can no longer be levied and work sponsored by DfT through its excellence programme has helped to inform this process.

6. Cuts in bus services generally, but in rural areas in particular, can lead to isolation and ultimately in the failure in the ability to sustain rural communities as a whole. ATCO are aware of the government plans for localism and how this can be used to maintain essential services, however, the scale of the cuts envisaged here will largely be beyond the scope of communities to respond.

7. The Comprehensive Spending Review has many facets and the reductions in local government spending has coincided with reductions in other funding to local bus services notably reductions in payments for concessionary fares and increase operational costs.

Bus Services Operator Grants (BSOG)

8. Government plans for a 20% reduction in BSOG planned from April 2012 will increase costs by 1.5 – 2%, or will result in a reduction of commercial services by a similar amount. In isolation one can envisage operators trying to minimise the effects of this; taken with other reductions in grants and higher costs ATCO believes that the effect of this reduction in BSOG is unlikely to be contained and that it will result in a direct reduction in services, rather than being passed on as a fare increase. Due to elasticity of demand, fares would have to rise by perhaps 5% to compensate. Fares in rural areas are already higher than those of more urban routes and further increases are likely to stifle or reduce changes in travel behaviour with a consequential knock-on negative effect on environmental standards. The 20% increase in BSOG on community transport would be similar, but as the sector may be reluctant to reduce their services or significantly raise fares due to their community ethos, it is most likely to result in greater difficulties and greater financial pressures, in direct contrast to the plans set out by government for localism.

Concessionary Travel

9. Government proposals to reduce operator reimbursement for the English National Concessionary Travel Scheme (ENCTS) from 2011/12 will have a major effect on operator income and therefore net costs. In rural areas concessionary revenue can equate to significantly more than 25% of all bus revenue. Reductions in income of these levels would have a severe negative effect on operators’ ability to continue to operate commercial services at current service levels, and supported contracted services at the current tendered rates. This would lead to further service reductions with the inability of local government to adequately respond to meet requirements of social need, given the post-CSR reduced budgets.

10. The DCLG formula-based approach has exacerbated the problem; it would have been sensible to transfer the known scheme costs from Districts to Counties. There is also a link between declining ENCTS operator reimbursement (and reduced profitability) and therefore reduced bus service levels; it may be more cost-effective to retain current reimbursement levels to avoid further commercial service withdrawals and further pressure on bus support budgets.

Passenger Transport Inflation

11. Passenger transport inflation continues to run at a higher level than Retail Price Index (RPI) inflation. Comparisons of increases in bus fares with RPI over recent years are therefore not entirely helpful. Recent increases include rises in insurance costs, staff costs (resulting from legislational change), new vehicle costs (meeting the requirements of legislational change on access for the disabled and emissions) and higher fuel costs.

Alternative Provision

12. Community and demand responsive Transport is seen by many as the potential saviour of local services, especially in rural areas. Those who have used these forms of transport for many years realise that they are an important form of local provision but are very expensive to operate and can generally provide little hope as the safety net for mainstream bus service withdrawals.

Local Authority Spending Limitations

13. The statutory priority of local authority spending on local transport is relatively low compared to other services such as Social Care where recent high profile court cases mitigate against cutting these services. It’s not just that local authorities have some very difficult decisions to take, it’s that the decisions they are having to take, due to other statutory responsibilities, are in effect made for them by the framework of statutory responsibilities set by central government for other services; transport in this context is not statutory - and therefore with reduced budgets is a lower spending priority.

Consultation

14. The lengthy notice period required for contracts and to meet statutory requirements of the bus registration system mean that it is virtually impossible to understand the implications of government spending decisions including the transfer of responsibilities and functions, and the likely budgetary impact within the timescales to meet those of the financial year. As a result budgetary cuts in 2011 will have to be larger to off-set the time period lost at the start of the financial year. Subsequently meaningful consultation, whilst desirable, is impossible to make without further damage to service provision.

January 2011