Bus Services after the Spending Review - Transport Committee Contents

Further written evidence from Lancashire County Council (BUS 51a)


1.1  Lancashire County Council welcomes this opportunity to provide the Committee with our views on the funding of bus services following the Comprehensive Spending Review.

1.2  Passengers in Lancashire make 170,000 bus journeys every day. More than 25,000 children travel to school by bus each year. The county council has invested significantly in new bus interchanges at major urban sites across the county in recent years. We work closely with operators and passengers to design and deliver high quality bus travel in all areas of the county—both town and country - and are committed to providing safe, reliable, convenient and affordable alternatives to car travel.

1.3  Lancashire has always been at the forefront of modern transport in Britain—from the early days of steam railways to the UK's first motorway. More recently, we have worked with European partners through the CIVITAS programme to design and deliver transport systems fit for the 21st century. We engage with our passengers and bus users can express their views on our services through an online feedback portal.

1.4  Our current Local Transport Plan recognises transport's dynamic impact on the daily lives and aspirations of Lancashire's million-plus residents. Given the fragile state of the economy, our top priority will be to support private sector-led economic growth by improving access to areas of economic growth, job creation, education and regeneration. Boosting skills, employability and opportunity through smarter public transport provision will create the conditions for local economic growth and empower citizens to improve their own lives.

1.5  Functional and affordable bus services are integral to local economic development. The central issue for Lancashire is the degree of connectivity between multiple sector-based "clusters" (like the "aerospace corridor" that runs from the coastal west of the county to east Lancashire, or our university campuses), education and training sites and larger residential areas. Local government has a vital role in ensuring, wherever possible, that workers and job seekers can access employment and training easily and affordably.


2.1  Lancashire County Council boasts a bus network which is 80% commercially operated by bus operators with the remaining 20% of the network being provided by subsidised bus services.

2.2  Net funding for subsidised bus services in 2009-10 in Lancashire was £6.5 million and this mainly provided rural, evening and weekend services across the County. These are services that are deemed socially necessary and which the bus operators are unable to provide on a commercial basis. In addition, we also fund other passenger transport services, namely community transport, home to school transport, SEN and Adult Services transport with a total spend in the region of £32 million per annum.

2.3  However, there are other significant funding streams to operators which in the main are not targeted towards particular areas but is "blanket" funding provided to the bus industry. In Lancashire, according to the most recent Department for Transport figures, £9.8 million in funding was provided to the bus industry through the Bus Services Operators Grant (BSOG). Whilst this grant is due to decrease in the coming years as a result of the Comprehensive Spending Review, it is still set to remain a significant source of bus industry funding. The previous government had announced their intention to move towards a payment based on an incentive per passenger (IPP), but this would still leave this funding as an uncapped and untargeted funding stream. There are also concerns that IPP has the potential for moving resources from rural to more urban operation.

2.4  The other main area of bus service funding within Lancashire is that of the concessionary fares scheme with a total £23.9 million per annum being spent on the provision of the scheme. Again, changes to the system are proposed but much of the funding will still remain poorly targeted.

2.5  Concessionary travel is the first application for the NoWcard smart card scheme. The scheme has been jointly established by Cumbria and Lancashire County Councils, and Blackburn with Darwen and Blackpool Borough Councils.. NoWcard is a smartcard platform that conforms to the national ITSO technical standard.

2.6  All bus operators within the NoWcard area have been equipped with ticket machines that will read a smart card. This is with the exception of Preston Bus. However, this company is expected to be "smart live" within the next six months. NoWcard has provided operators with grants to assist with purchasing the necessary on-bus and back office equipment, although some smaller operators lease their equipment via NoWcard, mostly those providing only contracted services.

2.7  Within each NoWcard smart card is a small electronic chip. For concessionary travel, ticket machines on local bus services read each NoWcard, check its validity and ensure that passengers are offered the correct level of concession. Personal details are kept securely by the appropriate Travel Concession Authority and these details cannot be read by bus service operators. The NoWcard allows the bus service operator and the local authority to account accurately for concessionary fares so that the concessions are paid for correctly.

2.8  The County Council and its partners are keen to build on the NoWcard platform now it is established. Within the next few months we will be introducing a pilot Stored Travel Rights scheme within the Chorley, South Ribble and Preston areas aimed at 16 to 23 year old people. This scheme, which has been agreed by all bus operators in the area, will allow young people to store a credit on their smart card and obtain a discount of at least 10% off the relevant fare when paying in this way.

2.9  The County Council has noted and supports the Government's commitment to delivering the infrastructure to enable most public transport journeys to be undertaken using smart ticketing by December 2014.

2.10  We have also noted the tremendous success of the London Oyster Card and will be working with our partners in NoWcard, other neighbouring transport authorities and our public transport operators to deliver a similar range of ticketing products. This would have clear benefits for facilitating expanded use of public transport in general and could be used to help achieve specific socio-economic objectives; like discount, reward or loyalty travel schemes for those people, for example, who may struggle with barriers to job entry such as access to transport. Such a scheme could also be expanded by councils, bus operators and train companies to incorporate other goods and services and take advantage of expected changes to council's trading powers presaged in the Localism Bill (General Power of Competence).

2.11  As the Coalition's Programme for Government (and associated Departmental Business Plans) makes clear, service integration must be a feature of future public policy making in the UK. Smart card technology promises to drive better integration between a range of publicly-provided services, including transport, employment, education, health and social care.

2.12  We note that from April 2011, all funding for the statutory concessionary travel scheme will be provided through formula grant. This will give councils new freedoms over the use of funding and negotiations over cost-effectiveness with operators.

2.13  We have been informed by government that the Department for Transport is "considering options for the long-term future distribution of bus subsidy, working with bus operators and local authorities to look at smarter ways of administering the subsidy to get better results for both taxpayers and passengers."

2.14  Guidance for the Local Sustainable Transport Fund has now been published. We wrote recently to the Parliamentary Under Secretary of State, who informed us that Fund proposals will "need to clearly demonstrate how they will contribute to supporting economic growth and reducing carbon emissions." The government made it clear that "it will be for local authorities, working in partnership with their communities, to identify the right solutions for their areas."

2.15  Government also reiterated its intent to bring together all funding streams into just two revenue pots - Formula Grant and the Local Sustainable Transport Fund - giving local authorities "the power to decide what's best for them and prioritise resources accordingly."

2.16  A recent report by the Local Government Association, titled "The Future of Bus Subsidy" proposes replacing the whole subsidy package with a single stream of public subsidy for bus services. The stream, it is proposed, should be devolved to local transport authorities who would be empowered to commission bus services from providers at the local level through a competitive tendering regime, thus maintaining competition for bus service operation but through a substantially increased targeted formula.


3.1  Lancashire County Council would be very keen to develop a pilot scheme within Lancashire based on the above and would be interested in procuring bus services utilising the Government's streamlined subsidy pot, along with bids to the Local Sustainable Transport Fund and our own subsidies for a range of specialised passenger services.

3.2  Adopting such an approach in Lancashire would allow us to specify subsidised route coverage in order to support the local economic priorities referenced earlier. We can use our own local knowledge, coupled with the expertise of the bus companies. It would also allow us to integrate school, social care and accessible transport with mainstream public transport and create the very real potential to make efficiencies through better procurement.

3.3  Under a system of streamlined single-pot funding, genuinely commercial bus services would not receive flat rate subsidy and local authorities would be able to choose to subsidise a single service over routes which currently receive multiple subsidy streams for numerous providers. The current system throws up unintended consequences that can sometimes undermine partnerships between councils and bus operators, such as when operators rely on councils to subsidise "feeder" routes to more profitable "major" routes once private sector support for the secondary route is removed.

3.4  As referenced earlier, greater flexibility to organise and fund bus operations in Lancashire will allow councils to capture savings through better "systems thinking"—for example, by ensuring that we maximise outlay on non-emergency hospital transport (eg adult social care) through better integration with "general" public transport services, or through an expanded smart card. This sort of system integration has clear implications for the future of both personalised and community-based budgeting.

3.5  It is possible, although not certain, that such new pilot arrangements could be managed via emerging Local Enterprise Partnerships (LEP) arrangements which may well include bus and other local transport providers as part of an individual LEP governance structure. Any new products or services—not to mention new ways of working—will require effective partnerships and we are committed to ensuring close consultation with bus operators.


4.1  Connectivity is the golden thread that links economic opportunity and aspiration in many deprived areas. We want to increase the ease and use of public transport in Lancashire so we can boost economic development, particularly in these more deprived areas. Beyond the environmental benefits of expanded use of public transport lie the benefits of greater access to education and training and employment. With greater freedoms and flexibilities to design and deliver truly local and intelligent bus services in Lancashire, we believe we can make a real difference to the lives of thousands of residents who want a better life.

March 2011

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