Bus Services after the Spending Review - Transport Committee Contents

Written evidence from the RMT (BUS 34a)


The National Union of Rail, Maritime and Transport Workers (RMT) welcomes the opportunity to submit evidence to the Transport Committee Inquiry into Bus Services after the Spending Review.

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

Prior to the Comprehensive Spending Review, a joint-letter was sent from a variety of passenger groups, environmental groups and trade unions (including the RMT) to the Government and to all MPs, which highlighted the dangers of scrapping the Bus Service Operators' Grant (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 reduction will still cause massive damage to the industry through:

—  Fare rises to meet the shortfall and any sharp rise 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.

—  Cuts 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. Services in urban areas will also be affected.

—  An increase in the costs of bus operators, which will have a negative effect on employment in the industry, both 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.

—  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.

—  The reduction in the BSOG will also impact negatively on the Treasury through increased unemployment, support for previously commercial bus services and lower revenue through taxation from previously successful bus operators, manufacturers and suppliers.

—  Bus passengers, many of whom are on low incomes, already pay more fuel tax than wealthier aviation passengers. While buses still pay a significant amount of fuel tax, aviation pays none. BSOG is equivalent to a £437 million a year investment in buses. In contrast, aviation gets a £6.5 billion a year tax break by paying no fuel duty.

—  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.

Norman Baker, Parliamentary Under-Secretary of State for Transport, recently stated that the benefits of BSOG - including keeping fares lower and bringing more people on to public transport—"are clear":

"Bus service operators grant, for example, directly provides operators with more than £400 million in support for bus services. The benefits of that grant are clear: it ensures that the bus network remains as broad as possible, while keeping fares lower and bringing more people on to public transport, with the obvious benefits of reducing congestion, lowering carbon emissions and improving air quality in our towns and cities. However, no matter how clear the benefits of such investment are, it is important that the Government get as much value as possible from every pound invested in services and it may be that we can increase the benefits of this grant even further. My hon. Friend may be interested to learn that I am considering whether it would be sensible to reform the way this grant is allocated, to ensure that it provides the maximum possible benefit for passengers."

Norman Baker, Hansard, 29 June 2010, Column 842

Also, in response to a Parliamentary Question on 25 November 2010, he stated that he had spoken to the "Confederation of Passenger Transport UK, who represent 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".

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."[50]

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."

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.

2.  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


3.  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

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.

Furthermore, although not included in the equality impact assessment, RMT believes that the reduction in the BSOG 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".[51]

Please see attached a report by the Campaign for Better Transport for the RMT.[52]

February 2011

50   Reported in the Telegraph Rural passengers face lost services and higher fares 22 November 2010. Back

51   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/  Back

52   Buses Matter: a report by the Campaign for Better Transport for the RMT, January 2011. Back

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