Written evidence from the RMT (BUS 34)
1. INTRODUCTION
As a trade union representing thousands of bus workers,
the National Union of Rail, Maritime and Transport Workers (RMT)
is deeply concerned at the social, economic and environmental
impact of the cuts to bus funding. As part of our ongoing campaign
on this issue the Bus Minister is speaking at a seminar open to
all parliamentarians hosted by the RMT Parliamentary Group in
February which will also be attended by many bus workers together
with representatives of user groups and local authorities. We
welcome the opportunity to submit evidence to the Transport Committee
Inquiry into Bus Services after the Spending Review which we hope
will assist the Committee and will be happy to give oral evidence
if required.
2. EXECUTIVE
SUMMARY
— Two-thirds
of public transport journeys are made by bus whilst 25% of households
in the UK do not have access to a car.i Despite the
vital role of buses in the day to day lives of millions of people,
buses are facing massive cuts in both national and local funding
which RMT has been advised by members will lead to reduced services
and higher prices, loss of concessionary fares and significant
redundancies.
— RMT
is working with Campaign for Better Transport on producing a report
on the impact of the cuts and although it is not yet complete,
initial conclusions confirm the cuts will disproportionately hit
the most vulnerable in our society. RMT has also contacted our
Branches with bus members and can share a case study of the impact
of the cuts from Derbyshire Council (see page 5 of this submission).
The cuts will have significant adverse consequences for a number
of groups, namely
— Young
people. Without affordable public transport some of the poorest
and most socially excluded children will not be able to access
projects and services designed for them. Older people are most
dependent on bus services. A Mori poll of over 65's for age concern
has shown the concessionary bus pass is more popular than the
winter fuel payment and post offices. Only the state pension and
the NHS were considered more precious. People who are already
isolated face additional hardship when bus services are withdrawn.
— Disabled
people will also be badly hit by the cuts. They are more likely
to mention transport a local concern than non disabled people.
60% of disabled people have no car in the household and they use
buses around 20% more frequently than non disabled people.
— People
on low incomes and jobseekers will be hit hard. The poorest half
of households in the bottom income bracket do not own a car, compared
to a national average of 25% (and only 10% of the top income bracket).ii
If job seekers are expected to travel by bus to find job opportunities
(as exhorted to by Iain Duncan Smith) there must be affordable
bus services for them to use. Cuts to bus services and fare hikes
will hamper the ability of people to gain employment.
— — RMT
believes that bus fares which have already risen disproportionately,
compared to car costs will increase further penalising the poorer
section of society.
— — It
is unacceptable that bus companies should raise fares and make
cuts whist paying significant dividends to shareholders. For the
big five companies this amounts to almost two thirds the value
of the Bus Service Operator Grant over the last ten years. Chief
Executives are also continuing to enjoy excessive salaries, with
one recently being awarded a 35% increase.
3. THE IMPACT
OF COMBINED
CUTS ON
BUS SERVICES
AND THE
ECONOMY
3.1 Local transport funding to local authorities
is being cut by an average of 28% and many ring fences are being
removed from funding sources that are supposed to be for local
transport, like the previous rural bus subsidy grant.iii
This will combine with a 20% drop in the Bus Service Operators'
Grant (BSOG) from 2012,iv and a cut of £54 million
to the budget for reimbursing operators for the journeys taken
by statutory concessionary bus pass holders.
3.2 Prior to the Comprehensive Spending Review, a
joint-letter was sent from a variety of passenger groups, environmental
groups, trade unions (including the RMT) and bus companies to
the Government and to all MPs, which highlighted the dangers of
scrapping the (BSOG). This letter highlighted the "damaging
and wide-ranging consequences for local communities, public transport
services, low-income groups, the UK economy and the environment"
if the BSOG were scrapped. RMT believes that although the BSOG
has not been removed in its entirety the combined overall reduction
will cause massive damage to the industry.
3.3 RMT believes the cuts will have a disproportionately
large impact on the unemployed. In fact, according to the Secretary
of State for Transport, Philip Hammond:
"Social mobility and, in particular, moving
people off welfare and into work, often depends on transport infrastructure.
If people on isolated and deprived estates cannot get a bus or
a train to the nearest city or town, they may be stranded without
work and without hope".v
3.4 The Department for Transports' own equality impact
assessment into the affect of the reduction on the elderly and
disabled raises some serious concerns. These include:
— — Recognition
of the fact that there is an indication or evidence that the elderly
and disabled have different needs, experiences, issues or priorities
in relation to the particular policy.
— — That
there is potential for, or evidence that, this policy may adversely
affect equality of opportunity for all and may harm good relations
between the different groups, in particular the elderly and disabled.
— — That
there is potential for, or evidence that, any part of the proposed
policy could discriminate, directly or indirectly, on the elderly
and disabled.
— — And
that there is evidence or an indication that there may be a reduced
uptake of the service by the elderly or disabled.
3.5 RMT is concerned there will be particularly
severe cut in commercial buses services, especially in rural areas
and on less used evening and weekend services. The problems faced
by rural services in managing the reduction will be compounded
by the fact that the Rural Bus Subsidy Grant will no longer be
ring-fenced.
3.6 An increase in the costs of bus operations
will also have a negative effect on employment in the industry,
directly and through servicing, manufacturing and supply services.
It will be most damaging to independent and small operators, where
large monopoly operators will be in a better position to absorb
the reduction. These smaller operators are also more likely to
operate in rural areas and in community transport.
3.7 Moreover transport authorities and local
councils, whose budgets have already been cut, will be unable
to make up the funding shortfall. Local-authority-subsidised services
would become increasingly unprofitable. It would also push up
the costs of running a significant number of school services.
3.8 There will also be economic consequences.
A previous study for the Government by the Commission for Integrated
Transport found that every £1 invested in BSOG provided between
£3 and £5 of wider benefits. These wider benefits will
be substantially reduced as a direct consequence of the reduction
in the Bus Services Operators' Grant.
3.9 Research undertaken by the Confederation
of Passenger Transport in 2010 examined the revenue generated
for suppliers and retail spend by bus passengers. This showed
that per year £3,630 to £4,445 is spent by the average
bus user on shopping trips taken by bus.
4. THE IMPACT
OF COMBINED
CUTS ON
FARES AND
ENVIRONMENTAL IMPLICATIONS
4.1 In response to a Parliamentary Question on
25 November 2010, the Bus Minister stated that he had spoken to
the "Confederation of Passenger Transport UK, who represents
the bus industry, following the Chancellor's announcement on 20
October. They were hopeful that, in general, the 20% reduction
in the Bus Service Operators Grant could be absorbed without fares
having to rise".
4.2 This directly contradicts the comments of
a number of bus operators who have made clear the negative impact
which this reduction will have on their ability to provide a service.
Peter Schipp, the chief executive of East Yorkshire Motor Services
who operate 320 buses in Hull, Scarborough and the East Riding
of Yorkshire said:
"We made a profit of £436,000 last year
and if this goes through we would lose £2.25 million a year
in grant from April ...our first port of call would be to increase
fares, I suppose people would rather pay more to keep their services.
We would also have to think about taking some services out, especially
early in the morning. Also if you push fares up, people don't
use buses and more services become unprofitable, so it is a vicious
circle."vi
4.3 Additionally Mark Howarth, managing director
Western Greyhound, which operates 117 buses in Cornwall, argues
that he faces a 40% cut in the grant he receives for providing
the concessionary bus travel for elderly and disabled persons.
"We will have to put up fares and cut services.
It would not just be rural routes which carry the odd granny,
it would be interurban routes which take people to school."
4.4 He also warned that councils, who facing
spending cuts of their own, will not have the money to plug the
gap and subsidise services themselves. Passengers on Western Greyhound
could see fares rise by as much as 50%, Mr Howarth warned, because
of the cuts in subsidy to the companies. This would see a one
way trip from Truro to Falmouth going up from £3 to £4.50.
4.5 The following parliamentary answer on 19
March 2009 shows that this will make a bad situation worse in
respect of the relative cost of buses to motoring.
Norman Baker: To ask the
Secretary of State for Transport what estimate he has made of
the percentage change in real terms of the cost of travelling
by (a) private car, (b) bus, (c) train and (d) aeroplane since
(i) 1979 and (ii) 1997.
Paul Clark [holding answer
13 March 2009]: Between 1979 and 2008 the real cost of motoring
declined by 17% bus and coach fares increased by 55% and rail
fares increased by 49% in real terms.
The costs of travelling by air are not available
from the retail prices index. However, the cost of the average
UK one-way air fare, including taxes and charges, covering domestic
and international flights fell by 49% between 1997 and 2006, the
latest date for which figures are available.
4.6 Rises in the cost of bus travel and cuts
in bus networks would increase car use, worsen congestion, damage
the environment and lead to higher costs for businesses.
4.7 Fare rises would weaken the contribution
to delivering on the Government's CO2 reduction targets through
modal shift from the car. "Low Carbon Transport: A Greener
Future" report published in 2009 by the Department for
Transport showed that greenhouse gas emissions from domestic transport
are still rising, amounting to 21% of all UK domestic emissions.
Buses can make a major contribution to delivering on the Government's
CO2 reduction targets through modal shift from the car as the
figures below from the 2006 Eddington Climate Change study bear
out.
— — The
CO2 per car passenger kilometre is 130g CO2, per bus/coach passenger
kilometre it is 69g CO2.
— — In
a city a journey by bus can result in half the CO2 emissions per
passenger compared to the car. This differential would become
much greater with model shift.
— — If
car drivers switched from car to bus or coach for just one journey
in 25 it would mean one billion less car journeys on our roads
and a reduction of 2 Million Tonnes of CO2.
5. IMPACT ON
BUS COMPANY
PROFITS
5.1 The impact of the bus cuts on the poor and
vulnerable in society has been demonstrated together with the
adverse effects on local economies and the environment. The impact
on these cuts however will be far greater because following privatisation
in the 1980's (since which time services have declined and fares
risen) the overwhelming majority of bus companies continue to
put the need to pay a dividend to shareholders before saving services
or keeping fares affordable. In short bus companies will not run
services unless they paid to do so or it is profitable to do so.
5.2 In a 2007 RMT survey of 5000 bus workers
an astonishing 69% of bus workers felt that the company they worked
for was more interested in making profits than providing a service
to passengers. Only 14% felt their company was more interested
in passengers than profits.
5.3 Research by the RMT below shows that in
the last decade the big five transport operators who own and operate
most of our bus services have reported combined bus and rail dividends
in excess of £2 billion which is almost two thirds of the
value in BSOG they have received in that time.vii It
is RMT's firm contention that the bus industry must begin taking
steps back to public ownership.
DIVIDENDS PAID BY BIG FIVE TRANSPORT OPERATORS,
NOT DISAGGREGATED SO ARE PAID ON THE BASIS OF PROFITS MADE IN
RAIL/BUS/LIGHT RAIL AND INTERNATIONAL OPERATION
| Year | Arriva
Dividends
| First Group
dividends | National
Express
Dividends
| Go-Ahead
Dividends | Stagecoach
Dividends
|
| 2000 | £33.4m | £36.6m
| £26.3m | £6.5m |
£54m |
| 2001 | £33.8m | £38.8m
| £28.6m | £7.6m |
£49.3m |
| 2002 | £34.6m | £43.1m
| £32.4m | £8.6m |
£34.1m |
| 2003 | £35.3m | £45.5m
| £35.1m | £12.7m |
£34.3m |
| 2004 | £35.6m | £47.3m
| £36.4m | £19.3m |
£38.4m |
| 2005 | £39.1m | £48.2m
| £41.6m | £21.5m |
£37.2m |
| 2006 | £39.6m | £52m
| £49.7m | £25.3m |
£36.6m |
| 2007 | £41.9m | £57.1m
| £54m | £28.9m |
£41.5m |
| 2008 | £47.8m | £69.5m
| £59.6m | £31.4m |
£30m |
| 2009 | £50.3m | £84.6m
| £15.2m | £34.8m |
£41.8m |
| 2010 | Not yet available |
£93.1m | Not yet available |
Not yet available | £76.7m |
| Total | £391.4m
| £663.8m | £398.3m
| £211.1m | £473.8m
|
5.4 It would also be interesting to note whether the cuts
will have an impact on the salaries of the chief executives of
the big five companies, shown below:
| Company | Highest Paid Director
|
| Arriva Group | David Martin £743,635 (31 Dec 2009)
|
| First Group | Moir Lockhead £643,000 (31 Mar 2010)
|
| Go-Ahead Group (65% of Govia) | Keith Ludeman £916,000 (27 Jun 2009)
£1,240,000 (July 2010, 35% increase on 2009)
|
| National Express Group
Interim 6 months ended 30 June 2008
| Ray O'Toole £644,000 (31 December 2009)
|
| Stagecoach Group
Interim 6 months ended 31 October 2008
| Brian Souter £762,000 (30 April 2010)
|
6. CASE STUDY—DERBY
COUNTY COUNCIL
6.1 RMT has been provided with the following information.
In a paper presented to the Derby County Council Cabinet meeting
on 1st October (attached to this submission) the Strategic Director
of Environmental Services warns
"It is apparent however that rising costs in the bus industry
and the increasing difficult financial climate necessitate a more
thorough review of the supported bus network.
Some significant savings have been achieved by the review of bus
services undertaken as part of the regular tendering process and
by improvements in the procurement processes. The current financial
position, however, cannot be sustained and further action is needed
to respond to financial pressures in both the short and long term.
It is inevitable that some passengers would be inconvenienced
by the proposed changes and, in some cases, particular journeys
would no longer be possible. However, the proposed changes are
designed to keep the overall impact on travellers to a minimum.
The experience gained from recent tender rounds suggests that
there may be considerable scope to achieve savings while ensuring
the provision of a good albeit somewhat reduced, level of service."
6.2 The paper then proposes the following areas for consultation
on bus services, (to be completed by (31 January).
Non-entitled Home to School Transport
"Around 1,700 non-entitled school children pay a fare, typically
50 pence for a single journey, to travel to school on bus services
funded by the County Council. Students using these services either
live less than three miles from secondary school (two miles for
primary school children) or have chosen to attend a school outside
their normal area. The fare income in many cases only covers 10%-30%
of the cost of the contracts, and the network requires a total
subsidy of just under £1 million paid for out of the local
bus revenue support budget.
The fares charged on these services are substantially below normal
commercial or other County Council rates. This highlights a lack
of consistency with other fare-paying students who are charged
considerably more if they use local buses with a b_line discount
or catch Council contracted buses to attend faith schools.
Raising fares to more consistent levels, and/or setting maximum
subsidy levels at, say, 50%, would improve income and reduce expenditure.
There would, however, need to be consideration given to the impact
on families."
b_line
"The b-line scheme currently provides a 50% travel subsidy
on buses and trains for young people between the ages of 14 and
19 who are in full time education. A possible option would be
to reduce the level of travel concession on offer, while retaining
other aspects of the scheme including discounts, library card
and PASS (the national Proof of Age Standard Scheme).
Such a proposal would mean students over the age of 14 paying
a greater proportion of any bus or train fare when using the b_line
card. This could result in significant savings on the coast of
the subsidy which is currently around £1.3 million per year."
Gold Card
"Free off-peak travel available on buses across England is
funded by Central Government and administered by the County Council
on behalf of the District and Borough Councils. On top of this
national travel entitlement, the County Council funds half fare
travel on local trains in and around Derbyshire, at a cost of
around £220,000 a year. A further concession costing the
Authority £240,000 a year gives Gold Card holders free travel
on Community Transport Dial-a-Bus services.
Clearly any decision to amend either or both of these concessions
could make further savings to public transport budgets."
CONCLUSION
The combined impact of the cuts in bus funding will have a detrimental
impact on the social, environmental and economic benefits that
bus travel can bring.
If there were similar cuts to rail services and travel concessions
on the national rail network there would be a national media outcry
yet even though far more people use buses there has been little
media attention to the onslaught buses are about to experience.
Perhaps the lack of media attention can be explained by what is
also the worst aspect of the cuts - namely that they will disproportionately
hit the most vulnerable and powerless in society. As many users
are utterly dependant on buses for work, education and leisure
the cuts could literally ruin lives and have a hugely detrimental
impact on whole communities.
That the cuts are taking place whilst the big bus companies are
making significant profits on the back of national and local government
subsidy only re-enforces the RMT's belief that the industry should
be returned to public ownership.
January 2011
REFERENCES
i DfT, Public Transport Statistics Bulletin GB: 2009 Edition (PDF)
ii While the data used is from 2003, it is the first
listed research report used to support the 21st Century Welfare
White Paper.
http://www.dwp.gov.uk/consultations/2010/21st-century-welfare/, cited in Equality, Work and Welfare, Campaign for better Transport,
2010, http://www.bettertransport.org.uk/system/files/Transport_social_equality_welfare_work.pdf
iii DfT, Transport Spending Review, 2010 http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=202&NewsAreaId=2&ReleaseID=416118&SubjectId=36
iv Ibid
v http://www.surreyherald.co.uk/surrey-news/surrey-columnists/2010/08/24/philip-hammond-mp-transport=-is-at-theheart-of-the-country-growth-86289-27135014/
vi Daily Telegraph 22 November 2010
vii Since 2000 according to Parliamentary answers BSOG
has averaged about £350 million a year.
| 
