Bus Services after the Spending Review - Transport Committee Contents

Written evidence from EYMS Group Ltd (BUS 35)


EYMS Group Limited is one of the largest independent bus operators in the UK, and one of only two former subsidiaries of the National Bus Company which remains independent after the NBC privatisation programme of the mid 1980s.

EYMS Group employs about 940 people, has an annual turnover of over £39 million, owns 410 buses and coaches and runs over 11 million miles on local bus routes each year, carrying about 25 million passengers on those services.

The Group's subsidiaries are East Yorkshire Motor Services Limited based in Hull, Finglands Coachways Limited based in Manchester and Whittle Coach & Bus Limited based in Kidderminster.

For simplicity statistics quoted in this submission refer only to East Yorkshire Motor Services which is by far the largest subsidiary, earning around £30 million of the total turnover referred to above and running over 9 million bus miles per annum with 325 vehicles.

The East Yorkshire subsidiary operates in Hull, East Riding and North Yorkshire on a wide variety of routes, ranging from intense urban in Hull to sparse rural in East Riding, in which local authority area EYMS is by far the largest bus service provider.

The importance of the bus industry nationally cannot be overstated. As recently remarked by the Minister, Norman Baker, buses are vital to the economy, and the backbone of public transport. This is undoubtedly true especially in many rural areas, but also in many of the more deprived urban areas, often providing the only means of access to jobs, health facilities, schools and shops.

Almost three times the number of trips per person are made on buses each year than on the surface rail and underground networks combined. In Hull, Council surveys suggest that almost half of those who come into Hull to shop do so by bus.

Yet successive governments, whilst paying lip service to the essential nature of road public transport, have consistently failed to do much to support it - indeed EYMS can find little, if anything, over the last few years in the way of government legislation, EU legislation and actions by bodies such as the DSA and the DVLA which have done anything other than increase costs, bureaucracy and administration for the bus industry, and more often a combination of all three.

The bus industry has suffered a welter of legislation which is referred to in a later section of this submission, but all of which has made bus operation more difficult and more expensive.

There has been much talk of a "war on motorists" but we would submit that in practice almost the opposite could be true since motoring costs in general have risen by only a small amount, whilst the labour-intensive bus industry costs have risen much more substantially. Only this week the government has announced its wish for local authorities to reduce car parking charges which will effectively encourage more car use, negating the previous policy of suggesting increased car parking charges to encourage public transport use. So yet again the bus passenger, for many of whom the bus is a vital lifeline, is treated very much as a second class citizen.

The impact of the reduction in Bus Service Operators' Grant, including on community transport

The original intention of the bus service operator grant (originally called fuel duty rebate) was to facilitate the continued operation of local bus services in many areas where they would otherwise be lost because they would be uneconomical to operate commercially, especially in rural areas margins are usually small and where often rail transport is not available as an option. In this BSOG has largely succeeded and has been a very simple grant to administer. In the case of East Yorkshire there are few if any communities which had a bus service in the sixties which do not still have some level of service now.

The freezing of the grant since 2008 has already substantially increased the cost of fuel for bus companies over and above the underlying cost of the product itself, and the planned 20% cut in BSOG from April 2012 will worsen this further, bringing an estimated loss of £600,000 per annum in the payment of BSOG to East Yorkshire Motor Services.

Looking at this another way the total tax yield (fuel duty less BSOG) from local bus fuel used by East Yorkshire will increase from £1,073,038 in January 2011 to £2,152,178 in April 2014 after the annual duty rises announced in October 2010 and the 20% reduction in BSOG are taken into account. This is an increase of 101%, and assumes inflation over the period averages 2%. Bearing in mind that until the 1990s all fuel duty was rebated this has created an entirely new tax take of in excess of 10p per passenger trip.

For East Yorkshire fuel price per litre net of BSOG will have risen by no less than 152% between 2004 and 2012, assuming that there are no increases beyond today's price in the underlying cost of fuel, which is almost certainly unlikely, and no further increases in duty although we understand there are more planned. All other things being equal, in the same period the overall net cost of road fuel will have risen from 9.29% to 18.16% of total operating costs

The impact of the reduction in local authority grant support to bus services and other changes to the funding of local authority bus schemes and services by the Department for Transport.

It is already know that in North Yorkshire the Council is planning to cut almost all of the evening and Sunday bus services it currently supports under contract. Hull City Council is likely to cut out or reduce the non-statutory (schools) local bus services it currently supports. No details have yet been given by the East Riding of Yorkshire Council but as this is largely a sparse and large rural area a significant number of bus routes are currently wholly or partly supported by the local authority and indications are that many of these will be withdrawn or curtailed. Together with the effects of the concessionary reimbursement cuts this is likely to deprive many of the East Riding rural communities of any bus service and will cause severe hardship amongst the residents of those communities who will be denied access to employment etc.

These service reductions are unlikely to be replaced by Community Transport operators since it is known than most in the East Riding are already having financial difficulties and finding volunteer drivers less willing to offer their services.

It has today been learned that for our Whittles subsidiary based in Worcestershire the County Council now plans to cut the majority of the contracts currently operated by our company (along with many others in the county) and if implemented this would cut by approximately half the current size of the bus fleet and this would probably make the remaining operation unsustainable.

The implementation and financial implications of free off-peak travel for elderly and disabled people on all local buses anywhere in England under the Concessionary Bus Travel Act 2007

We believe that the national travel concessionary scheme has been fundamentally flawed from inception in 2008 and the current plans to change the reimbursement formula will make matters significantly worse.

We believe that the scheme is both morally and legally inequitable given its underlying basis that operators should be "no better and no worse off" as a result of its operation. At East Yorkshire approximately 40% of passengers now travel free under the scheme and for some operators, especially smaller ones in rural areas, the figure is much higher. In Bridlington, served by East Yorkshire, 70% of passengers travel free on the town route network and we have seen figures as high as 90% for entire operator networks in other areas.

This underlying principle therefore means that in the case of East Yorkshire, roundly 40% of our business has profit levels frozen at what they were before the scheme started, even if unacceptably low, and any necessary increase in income, not least to cover the costs of legislative changes and achieving reasonable business margins, thus has to be borne by the 60% of remaining fare paying passengers, which seems grossly unfair and inequitable. The proportions are clearly even less helpful for some other operators.

Furthermore operators are now restricted in what they can do to market services to passengers through one of the normal methods, which is fares promotions, since any fares reduction, even for a short promotional period, affects the adult fares on which the concessionary reimbursement is based in almost every TCA area. Thus reimbursement is reduced even though no more concessionary passengers will be carried since the fares promotion is of no relevance to them and there will be no incentive for more of them to travel and bring an increase in the reimbursement.

The DfT draft reimbursement guidance would, at our best estimate, have reduced concessionary fare reimbursements to East Yorkshire Motor Services by £2.25 million a year for a company which in 2009 made a net profit after tax of only £435,000. The forecast net profit for 2010 is likely to be very similar.

The revised guidance which has now been issued to local authorities is estimated to reduce this loss of reimbursement to around £1 million for East Yorkshire Motor Services but this is still a huge sum and comes on top of inevitable cuts in contracted services by local authorities whose funding reductions will, we know, result in many local bus service contracts being withdrawn.

We are aware that for some operators, especially those who have successfully increased passenger numbers in recent years, the revised DfT reimbursement guidance will actually make matters even worse which again appears to be hugely unfair for those good operators who have, through marketing and other initiatives, managed to increase the size of their business to the undoubted benefit of the local communities they serve.

We believe that the revised guidance is still seriously flawed and based on far from perfect research, and coupled with local authority contract cuts and next year's reduction in BSOG will result in significant bus service cuts especially in rural areas, and above-average fares' increases for paying passengers on those services which remain.

Another effect will be to stifle investment in new buses and make it extremely difficult, if not impossible, for some operators to achieve the final deadline of 1 January 2017, by which time all buses used on local services, not just new ones, have to be DDA compliant. There is therefore little or no opportunity for operators to improve their finances by cutting back new bus purchases. The inevitable effect of this combination of financial factors will damage bus operators' balance sheets and this in turn will make it much more difficult to get finance from banks, etc. for the purchase of new buses, especially given the banks much more cautious lending regimes which are now in place.

How passengers' views are taken into account in planning bus services, and the role of Passenger Focus in this area

We believe that the work of Passenger Focus since its remit was extended to cover this local bus service and has been generally positive and helpful. Passenger Focus appears to be taking a realistic view and whilst acting as a "critical friend" of the bus industry and rightly challenging operators where they fail to provide good service, has been generally supportive of the industry in its efforts to increase further the quality of service offered and its efforts to increase passenger numbers against its major competitor, the private car.

Locally a great deal of effort is put into obtaining passenger views and it is widely known that East Yorkshire Motor Services welcomes both positive and negative comments from passengers and prospective passengers and carefully takes all comments and suggestions into account. Being locally based and managed, East Yorkshire Motor Services is at the very heart of the communities it serves and its Chairman and other Senior Managers participate actively in the Hull and Humber Chamber of Commerce, the East Riding Transport Partnership, the Ryedale Transport and Access Partnership and the Hull Quality Bus Partnership.

In addition, bus forums are regularly held to which the public have access and can directly question company senior executives and the company directly supports the City of Hull Environment Forum which, based on behalf of the Hull and East Riding authorities, undertakes regular bus passenger surgeries through the area using a specially converted bus sponsored by the company.


As briefly mentioned above the bus industry has suffered hugely under a veritable flood of regulatory burden in the last few years. Just some examples of the most significant are:


Concessionary fares.

EU Training Directive costs.

EU Drivers' hours applicable to routes over 50km.

Digital tachograph regulations for routes over 50km.

DDA requirements incl vehicle construction.

End of life vehicle directive.

EU emissions requirements (more expensive engines and more fuel for less emissions).

HSE level crossing risk assessments.

Trade plate tougher enforcement.

Above RPI increases in fees from VOSA, DVLA, DSA.

Tougher DVLA minimum test vehicle requirements (ABS etc).

To come - EU passenger rights directive (less than feared but still likely to cost in respect of passenger information for the disabled etc).

Non-industry-specific but expensive rules:

Minimum pay regulations.

Age discrimination rules.

Control of asbestos at work regulations.

DDA employment rules.

Employment Acts (maternity pay, time off with pay rules etc).

National Insurance increases.

Noise at work regulations.

Working time directive.

In particular the EU directive on vehicle emissions has resulted in more expensive engines requiring more fuel to produce reduced emissions, and still to come is Euro 6, we understand in 2012, which we are reliably informed will mean even more expensive engines requiring yet more fuel and possible reduced passenger capacity since the engines are likely to be bigger. To illustrate the point fuel consumption at East Yorkshire has worsened from an average of 8.71mpg in 1994 to 7.35mpg in 2012 - an increase of 18.9%. This is also partly due to increased traffic congestion and more traffic management measures which have not helped bus speeds but the overall effect of worse fuel consumption has to be considered alongside the huge increases in the price of fuel itself as described above.

The burden of maintaining a defined benefit pension scheme, put in place at privatisation to mirror the previous NBC scheme and to provide the best employment package for staff in the private sector environment, has also been considerable due to constant legislative changes which have also been almost universally more burdensome and costly.


The Chairman of EYMS Group, who was a member of the management buy-out team in 1997 and has been the sole shareholder since 1997, has been with EYMS for 30 years and in the bus industry for almost 49 years, states that in his opinion the bus industry is now facing by far its biggest challenges and threats, certainly since the mid 1970s when severe cuts to the local bus service network had to be made by the nationalised National Bus Company.

The combined adverse effect of local authority funding cuts, BSOG reductions, concessionary fare reimbursement cuts and further legislative changes still to come, is certain to have the most serious consequences for bus passengers and the overall effect would do nothing for the government's policies on climate change, congestion reduction or social inclusion.

January 2011

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