Transport Committee - Competition in the local bus marketWritten evidence from Peter Hendy CBE, Commissioner of Transport, Transport for London (LBS 50)

During my oral evidence for this inquiry on 16 May, I offered to write to the Committee with more information about the level of financial support currently provided for bus services in London. The Committee staff subsequently asked for this information to be listed for the past few years.

In 2011–12, subsidy for services totalled £393 million, which is equivalent to 17p per passenger journey. This figure is expected to decline to approximately £355 million in 2014–15 or 15p per passenger journey.

The following table shows the subsidy since 1999–2000, together with the number of journeys made in each year and the level of support per passenger journey.

Financial year

Bus
network
subsidy
(£m)

Passenger
journeys
(m)

Subsidy per
journey
(E)

1999–2000

-10

1296

-0.01

2000–01

24

1354

0.02

2001–02

118

1430

0.08

2002–03

241

1534

0.16

2003–04

384

1702

0.23

2004–05

422

1793

0.24

2005–06

446

1816

0.25

2006–07

461

2069

0.22

2007–08

500

2176

0.23

2008–09

563

2247

0.25

2009–10

540

2257

0.24

2010–11

428

2289

0.19

2011–12

393

2344

0.17

The subsidy shown covers the cost to Transport for London of all the contracts placed with private operators to run the bus service in London, including both their operational costs and capital expenditure, less fares income. Figures are in real terms.

The rise in subsidy shown in the first half of the table reflects the transformation of the network which has taken place since 1999, in both scale and quality. Growth was fastest in the period from 1999–2000 to 2004–05, with bus-kilometres operated increasing by approximately 30% over the five-year period. Excess waiting time (the principal indicator of service reliability) was cut by almost half over the same interval and customer satisfaction ratings increased. Since 2004–05 these gains have been sustained and built on. Patronage continues to grow and customer satisfaction has risen further.

This has been achieved by investment across the range of inputs driving customer satisfaction. This includes: adequate staffing levels and resilient schedules, modern vehicles, improvements to driving standards and customer service, and excellent passenger information and accessibility. Additionally, the network is kept under constant review so that it continues to support economic and social development across London, in terms of adequate capacity, comprehensive coverage and good connectivity.

Additional Information from Transport for London

Payments to TfL from the boroughs in respect of people using Freedom Passes are included in the calculations as TfL revenue. This is because these payments are intended to cover the fares that pass holders would have paid to TfL in the absence of the pass, after taking account of the travel-generating effect of the scheme itself, and the direct additional costs incurred. The payment in 2011–12 was approximately £208 million.

The money we receive from the London boroughs includes payment for journeys made on non-London passes (the local authority where the trip starts has to pay, not the authority who issues the pass). Out of the £208 million 2011–12 settlement about £6 million was in respect of journeys made with non-London passes.

The subsidy numbers above refer to the net cost of London bus services, ie the difference between the costs to TfL of the bus services and the revenue taken by those services, including reimbursement for concessionary fares. There are also other costs associated with providing the network, including: marketing and passenger information; the iBus system; ticketing systems; bus stations, stands, stops and shelters; liaison and consultation with local authorities, London TravelWatch and others. These costs totalled approximately £120 million in 2010–11, excluding depreciation.

31 May 2012

Prepared 13th September 2012