Written evidence from Suffolk ACRE (Action
with Communities in Rural England) (BUS 46)
The impact of the reduction in Bus Service Operator's
Grant, including on community transport
Whilst the delay in implementation of this change
is to be welcomed, the underlying reduction in BSOG is of serious
long term concern. A previous role that this respondent has held
was as owner/manager of a small PSV company (10 vehicles on bus
contracts, 10 on private hire). Far from the case of 'further
lining fat cat's pockets' as often reported, BSOG provided an
absolutely essential income to help make ends meet on a very thin
financial margin. Without BSOG, only two options exist. On contracted
work, prices submitted to Local Authorities (LAs) for tenders
will rise to compensate for the loss of BSOG, as currently operators
take into account this additional revenue stream when submitting
competitive bids. In this case, local authorities will find their
costs increasing. Secondly, on commercial services, or those supported
services where the operator retains on-bus revenue and is free
to set their own fares, passengers are likely to face increased
charges. This is a difficult judgement call, as such a move is
more likely to result in reduced patronage overall amongst paying
customers - not conducive to long term viability. The cost of
bus use has risen considerably above the cost of private car use
over the past few decades, and this is also not conducive to long
term survival of the sector. The difficulty in maintaining a viable
patronage base when increasing fares has potential to lead to
deregistrations, further increasing the cost burden on LAs.
The effect on CT operators is very similar, except
that most CT operations are dependent on LA funding. As a result,
these organisations will find their alternatives are either to
find increased support from LA's, to restrict any extraneous activities
they engage in, or to find themselves heading into debt and possible
closure. Some community bus operators run Section 22 services,
staffed entirely by volunteers and run on a commercial basis.
These are generally from highly rural areas, typically providing
weekly links to markets, or once a month to large towns. For these,
BSOG is an important and pro-rata large element of their income
and any reduction would create an immediate and severe cash flow
implication.
In addition, it should be borne in mind that there
are strong pressures at present to renew the PSV fleet. Not only
is the impact of low floor legislation very strong at present,
with some vehicles becoming illegal for local bus services in
four years time, but with pressure from various sources (eg Low
Emission Zones) for continual upgrades to Euro 5 and beyond. Whilst
these objectives are laudable, they are difficult for smaller
and medium sized operators to achieve. Whereas traditionally the
older vehicles in a fleet were cascaded for use on more rural
services, with little or no replacement costs, recent years have
seen a trend where this no longer occurs, as fleets become younger
and such costs still apply - rendering such services uneconomic.
Once all vehicles need to be of low floor specification, this
process will intensify. Such matters only increase the need for
a continuing rebate on fuel duty, which is simple to calculate,
simple to apply, and bears a direct correlation to mileage incurred.
Please also see the last paragraph under the next
heading.
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
In Suffolk this reduction is already being seen.
Plans have been progressed and tenders are now out for reduced
services. Some are being cut altogether and many are seeing reductions
in frequency. Attractive travel options built up over many years,
and especially since the introduction of the Rural Bus Grant (RBG),
are being lost in a moment. On the plus side, some operators either
already have, or are in the process of, converting to commercial
operations, rather than lose territory. They take the view that
they then have the ability themselves to take whatever action
is necessary to maintain (or initially ensure) viability, but
at least they can maintain some work and market share. To some
extent this probably would have occurred at some point anyway,
as Suffolk CC has been building bus use in recent years, but these
actions have been hastened by the knowledge of imminent contract
reductions. Such actions are helpful from SCC's point of view,
as they represent reductions in contract revenue commitments.
The non-statutory public transport provision in the county will
experience budget reductions of over 50%. To some extent, it can
be argued that this is more within the spirit of the Transport
Act 1985, and places the onus for creating the shape of rural
services primarily on the operators. However, it also justifies
the principle of RBG, without which these possibilities would
not now exist. It can thus be argued that a certain level of financial
support is required overall in order to allow sustainable provision,
and also that funding is now dropping substantially below that
level.
Within this, community transport in Suffolk is expecting
funding to remain relatively constant in overall terms. However,
expectations are that the CT operations will expand to fill the
gaps vacated by bus routes. Although this does fit with the general
development policy that SCC has been following, without funding
to allow this, or conventional bus routes to feed passengers in
to, genuine fears are that CT services will be totally overwhelmed
and unable to cope with the volume and wide variety of travel
requests.
Most CT operators do not possess PSV Operator licences,
and yet would be well placed to compete in this market. However,
the application process is slow (often up to six months) and does
not fit into the LA tendering process, which is more a matter
of weeks in length. This is a shame, as CT operators could be
well-positioned for running services that larger PSV companies
find uneconomic, or require subsidies to assist with. However,
doing so with maximum 16 seater vehicles would be impractical,
as would the ability to raise funds for additional vehicles at
such short notice. More and less complicated ways need to be found
to enable Community Transport operators to compete on a level
playing field with PSV operators. This is not stated as a way
to circumvent the legislation for PSV, simply as a way to enable
easier progression to such status without having to "begin
again from ground zero".
Both the Bus Service Operator's Grant and the severe
reduction in available local authority subsidies, have a severe
effect on the ability of new entrants to join the market. Personally,
having previously commenced operations as a bus company, twice
in the past, and for over a year now having being in possession
of a new Operator's licence, I am not inclined to commence any
new operations. Not only are the increasingly stringent requirements
and decreasing reimbursement for BSOG making any prospect of breaking
even further removed, but the opportunities for work are almost
non-existent. In a rural area such as Suffolk, the opportunities
for commercial services are really very tiny.
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
Fundamentally this scheme has, in my opinion, had
two major flaws from the beginning. It has been under-funded,
and the concept of bus operators' being "no better and no-worse
off" is inappropriate. Whilst bus operators have seen payments
for revenue foregone that give insufficient compensation for the
numbers travelling, local authorities have found their budgets
do not match the demands for concessionary payments. Identifying
a level of reimbursement that leaves an operator no better and
worse off has proved difficult at scheme implementation, but as
time progresses and any ability to accurately "benchmark"
disappears into the past, all such attempts become further removed
from reality. It is no wonder then that the enforcement of reduced
reimbursement rates is perceived as theft. There is nothing new
in this, I remember similar arguments back in the early nineties,
under a "half fare for pensioners" scheme, when a Borough
Council arbitrarily decided to alter the "generation factor",
simply to save money. However, today the opportunities for such
summary changes are vastly more widespread, and affecting as they
do the entire reimbursement for travel rather than a percentage
of it, the effects are more far reaching and more difficult to
absorb.
Overall, the scheme has been successful - even highly
impressive - in creating modal shift and allowing greater travel
opportunities for the isolated or economically vulnerable. It
has also, by doing this, helped to raise the profile and perceptions,
of bus travel. However, to expect companies to provide a service
for considerably less reimbursement than the going rate, and to
make this a legal obligation, is not only of dubious financial
sustainability but is also highly questionable ethically. Things
are not helped when government representatives refer to the scheme
as a subsidy to operators, when in fact it is a subsidy to the
user made at a cost to the operator. A way needs to be found to
balance the books, whilst also allowing the continuation of a
highly popular scheme that has undeniably helped to increase patronage,
at the same time (if possible) simplifying reimbursement processes
and accurately reflecting revenue foregone. If it were possible
to introduce a small flat fee per journey (say 20p?), the revenue
going straight to the operator in addition to reimbursement, and
a fee (say £5?) for issue of cards, that going to the relevant
authorities, neither of this measures would be inappropriate,
and if current funding were left unchanged (rather than further
reduced), a significant step would have been made to resolve the
funding difficulties.
Whilst the increase in patronage has, by and large,
proved welcome to operators, footfall does not equal profit and
most find themselves forced into a situation of increased turnover
through sales tactics, but reduced profitability. This is not
a long term option for any business.
From a CT operators' viewpoint, the national concessionary
bus pass scheme has probably overall been a good thing. Being
deficit funded (in Suffolk anyway) by SCC, with revenue returning
to the LA, the lower income has been an issue for SCC to be concerned
about rather than the individual operator. Conversely however,
it has enabled the isolated and deprived to be able to afford
services they may well find much more difficult. This has resulted
in increased patronage and has done much to reduce rural isolation
for those unable to use conventional bus services. It has also
meant, for those who use non-local bus registered services on
which bus passes are not valid, that there is now a legal obligation
to provide a voucher alternative that is acceptable on Dial-a-Ride,
Taxi or car services. Whilst this often results in a difficult
choice of vouchers or pass, and the value of vouchers offered
is pitifully low by comparison, the obligation to provide an alternative,
and the ability to use them on many flexible services is undoubtedly
a benefit.
HOW PASSENGERS'
VIEWS ARE
TAKEN INTO
ACCOUNT IN
PLANNING BUS
SERVICES, AND
THE ROLE
OF PASSENGER
FOCUS IN
THIS AREA
By and large I do not believe that passengers' views
are taken into account. Local Authorities are often very strident
in accusing private operators of changing commercial services.
However such changes are generally incremental, usually only affect
a small number of journeys, and precisely because they are profit-motivated,
they seek to satisfy the majority of users and address perceived
needs. In their defence, passengers travel patterns are observed
and such data would (normally) inform the operators' decisions.
Where operators do attempt to engage with local communities, this
often results in specific individuals with an axe to grind requesting
unrealistic provision based on unfounded personal views. There
have been notable exceptions, but such occasions do little to
encourage community involvement. When the Transport Act 1985 was
introduced, much was made of comparing bus routes to "supermarkets
on wheels", yet it is deemed perfectly usual for ASDA or
Sainsbury's to make changes to their range of goods based on sales
information alone and without consultations. Local Authorities
however, react to budgetary pressures in a much more sudden manner.
At present, for example, sudden major changes are being implemented
that are operationally motivated and cost driven, and bear no
real relation to what the general populace requires. A similar
event happened two years ago, when a 25% cost cutting exercise
was nearly implemented, but then withdrawn at very short notice,
causing a number of ramifications in the process.
In Suffolk, having said this, there has been a program
of user interrogation over the past few years, as part of the
roll out of a series of demand responsive services, running under
Section 22 permits. In order to ensure these new schemes best
match the need for the local area, a full program of stakeholder
involvement, household surveys, and local focus groups has informed
the LA's planning. Such a process is rare in public transport!
The information gained has been invaluable, but the process does
take time and has been regrettably rendered impotent by the speed
of recent cuts.
Passenger Focus has not, to my knowledge, had any
relevance in Suffolk.
January 2011
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