Written evidence submitted by The Go-Ahead Group plc (PEG0259)

Background

Go-Ahead is a leading UK public transport operator, providing high quality services in the bus and rail sectors. We run bus companies across the country, from Plymouth to Newcastle, with a quarter of London’s buses for Transport for London (TfL). Go-Ahead operates a fleet of 5,200 buses, which carry more than two million passengers a day.

We have also led the call for the creation of a National Bus Strategy to revitalise a mode of transport which provides two-thirds of all public transport journeys in the UK. The Government’s stated commitment to a National Bus Strategy and investment in 4,000 new electric buses is now even more vital, and should be part of a green recovery from the Covid-19 pandemic.

Internationally, we provide bus services in Singapore and Ireland, and rail services in Germany and Norway. Go-Ahead is responsible for nearly 30 per cent of all UK rail journeys through its Govia Thameslink Railway and Southeastern franchises. We employ around 30,000 people globally.

Executive summary

Public transport is pivotal of the UK economy, and 60% of public transport journeys being made by bus. Encouraging people to return to using buses and trains is essential to revitalising our towns and cities as part of post-pandemic economic recovery. It will also be vital to ensuring that recovery is socially inclusive, and beneficial to both the environment and public health.

In line with the approach taken in other countries, the UK Government should positively encourage a return to using public transport. Long term economic and environmental damage is arising from the sustained use of a negative ‘avoid’ message. Buses and trains are clean and safe and people should feel confident to use them.

We also calling on the Government to put more substance behind its drive to create UK skills-based manufacturing to fuel green recovery. This can be achieved by delivering on its pledge to deliver 4,000 new zero emission buses through a leasing model that recognises the challenging situation the bus industry now faces.

The role of public transport as an enabler needs to be better understood to make Industrial Strategy effective at local and regional level, with an emphasis on deliverable quick-wins. And the Apprenticeship Levy needs more flexibility to enable spending on local resources and providers.

NB – We have structured our response against the questions provided, whilst not responding to every specific question.

1. Before the pandemic, what were the constraints on growth that affected your business?

Road congestion 1.1. Congestion has been a challenging issue within towns and cities in which Go-Ahead operates. Overused roads have meant slower journeys and inefficient use of urban transport infrastructure. 1.2. Congestion in the UK’s largest cities is 14% worse than five years ago, and traffic speeds are forecast to fall by almost 5mph from 17mph to an average of 12mph by 2030, and significantly slower in peak hours.1 Evidence has shown that a 10% decrease in bus speeds can reduce patronage by 10% or more, especially when increased congestion leads to increased variability in journey times. At the start of 2020 it was the case that five routes provided by our Go North East bus company each cost £100k extra to operate compared with five years ago. In January 2020 we removed our X90 service between Oxford and London after a 50% increase in journey time due to congestion. 1.3. By ignoring the congestion problem, we are missing the opportunity to create a virtuous circle where improved bus speeds attract passengers, leading to fewer cars, faster journey times for everyone and a multiplier on positive economic impact.2

1 Greener Journeys, The Impact of Congestion on Bus Passengers report, 2016 URL: https://greenerjourneys.com/publication/impact- congestion-bus-passengers-new-extended-version/ 2 Greener Journeys, The Impact of Congestion on Bus Passengers report, 2016 URL: https://greenerjourneys.com/wp- 1.4. Go-Ahead commissioned research found that commuters build in a 13-minute “traffic jam allowance” to their daily journey to work. Nevertheless, four out of ten have been late for work in the last six months due to traffic jams. 1.5. With Covid overall congestion has decreased but with car use already at 92% of normal levels, despite less economic activity and much working from home, the ongoing impact of the Government’s ‘avoid public transport’ message is likely to lead to more congestion problems ahead (see section 4).

Labour supply (London and south east) 1.6. Prior to Covid, a constraint on our businesses in London and South East was the limited supply of labour, hence leading to cost pressures. The Government’s plans for a points-based system for immigration from Jan 2021 could potentially create challenges if bus driving was not viewed as constituting a ‘skills requirement’. 21% of our London bus drivers and 21% of our Oxford bus drivers are EU citizens, and we continue to value their contribution. In total 14% of our bus drivers nationally are EU citizens.

Changing human behaviours 1.7. Shifts in social behaviour was already impacting the demand for bus services pre-Covid, including the move away from ‘people to goods’ towards ‘goods to people’. 1.8. This connects to the recent decline of the traditional High Street (the rise in on-line shopping had already led to a 30% decrease in physical shopping trips taken), alongside increased rates of mobile working from home (even before Covid, 31% of British workers were working from home at least one day per week3). 1.9. These changing behaviours, pre-Covid, involved Britons make 16% fewer trips than 1996, travel 10% fewer miles than in 2002 and spend 22 hours less travelling than we did a decade ago.4

2. Thinking more specifically, what restraints prevented your business from increasing:

A. Investment in the net zero transition

Accelerating the introduction of zero emission buses

2.1. A coordinated strategic approach involving both Government and private companies is required to enable an accelerated transition to low and zero emission transport, across both bus and rail. 2.2. Go-Ahead is the largest operator of electric buses in the UK and is committed to operating a zero- emission fleet by 2035. We have pledged to purchase no new diesel vehicles after 2025. 2.3. Go-Ahead led the industry by working with Transport for London and other local partners to establish the UK’s first all-electric Waterloo bus garage in 2017. 2.4. Go-Ahead is innovating to overcome challenges in transition to zero emission. In 2019 we introduced 30 new extended range double decker buses in Brighton & Hove that use geo-fencing technology to operate in zero emission mode throughout the city’s Low Emissions Zone. 2.5. The transition to zero emission fleets involves significant cost. This is due to several factors, including a low supply of competitively priced zero emission buses, high bus depot conversion costs and national grid capacity limitations. Charging infrastructure in depots is an additional £1m – £2m cost dependent on the availability of supply locally, coordinating power suppliers and planning authorities can be complex. 2.6. Effective liaison with power companies and planning authorisations is also important. The process and cost of electrifying depots is highly variable depending on the demands upon, and capacity of the local supply networks. These variable start-up costs require public sector involvement through a joined-up strategy to enable more depots across the country to be converted to all-electric. 2.7. To maximise the return on the investment, local authorities should discourage unconstrained private car use in city centres and incentivise use of public transport through prioritised road space and traffic management schemes to tackle congestion, reduce bus journey times and minimise delays. 2.8. The delivery of zero emission vehicles has been undertaken through capital investment from a mixture of ourselves and Govt funding. However, the funding model needs to change reflecting our inability to make profits in our commercial bus business post Covid.

content/uploads/2016/06/Prof-David-Begg-The-Impact-of-Congestion-on-Bus-Passengers-Digital-FINAL.pdf 3 Virgin Media, Survey, 2017. URL: https://www.ispreview.co.uk/index.php/2017/06/virgin-media-asa-consider-homeworkers-ads- broadband-speed.html 4 Marsden, G. et al. (2018) All Change? The future of travel demand and the implications for policy and planning, First Report of the Commission on Travel Demand URL: http://www.demand.ac.uk/wp-content/uploads/2018/04/FutureTravel_report_final.pdf 2.9. Our industry body the Confederation of Passenger Transport is proposing a leasing model where operators pay a fee in exchange for long term usage of the bus. The purchase of these buses, which would all be zero emission, would be financed through a combination of £2bn of government and private investment. 2.10. We would like to see progress on a leasing model for zero emission buses, as part of a green recovery that reduces carbon emissions and protects highly skilled UK manufacturing jobs.

Decarbonising rail travel

2.11. Nearly all of our rail services across GTR and Southeastern are electrified. However, rail as a whole needs to make further progress on decarbonisation with support from Government. As well as further investment in electrification, the Government needs to provide incentives within the franchising system towards innovation (eg for trials of battery powered trains and hydrogen trains). GTR has innovated through its Class 700 fleet which is recycling 15.8GWh of energy, being returned into the network, equating to a decreased energy demand of over 50% on the rolling stock it replaces. 2.12. Rail is a green mode of transport, but its ability to contribute to the decarbonisation of transport is being hindered by the low levels of rail use arising from the Government’s sustained ‘avoid’ message in response to Covid 19. Tackling this needs more positive messaging from Government (section 4); it also needs effective reform of rail fares and ticketing. 2.13. Go-Ahead has been at the forefront of the development of smart ticketing on rail through our Key smartcard product, and successful extensions of contactless ‘pay as you go’ beyond London. In May 2021, 65% of Southeastern’s passenger journeys used some form of smart ticketing. 2.14. Smart ticketing enables more flexible tickets (e.g. carnet type products, part time seasons) but the current fares structure is inflexible due to regulation that has made it complex and restrictive. With the increase in working from home due to Covid 19, it is vital that where commuting journeys reduce to a part time basis there are suitable rail ticketing products to avoid an unnecessary shift to car travel. No matter how frequently people choose to travel, we need fares reform to establish a system which encourages customers to choose rail when they do.

B. Investment in digitisation and technology to improve productivity

2.15. Go-Ahead is always seeking to innovate to improve productivity or wider benefits. In a world first, we have introduced in Southampton on our Bluestar service five ‘air filtering’ buses that clean the air of particulate matter as they travel around the city. This followed a successful trial in 2019 that demonstrated that a single bus could remove as much as 65g of pollutants from the air – equivalent to the weight of a tennis ball – in a 100-day period. We are ready to share our innovative technology with local authorities across the country to help tackle air pollution. 2.16. Our Air Filtering Bus is an innovation project that we have pursued at a cost to the business without incurring any revenue gain. To further innovate, we need easily accessible Government and third party grants that can enable business cases. The design of such grants needs to recognise and embrace the inbuilt decarbonisation benefits of public and shared transport. 2.17. Projects like our Air Filtering Bus are relatively small scale but have a clear demonstrable benefit to the towns and cities concerned. Bluestar also partnered with data platform provider Swiftly; this sped up access to key data sets enabling bus scheduling processes to be reduced from three days to just five seconds. 2.18. Government funding for innovation should be targeted at projects that are likely to demonstrate clear benefits to the environment and the economy within a defined period of time. Grants have been given to test innovative concepts (e.g Connected and Autonomous Vehicles) which are not likely to translate into short or medium term beneficial changes to transport provision. A more incremental approach that looked at how more automation could progressively be introduced, in parallel with lower emissions, into conventional vehicles and services could provide more benefit. 3. What Government policies and/or institutional support has worked well for your business and what would you like to be retained?

Bus Services Operators Grant (BSOG)

3.1. A key factor in delivering a wide range of bus services to communities is the provision by Government of Bus Service Operator Grant (BSOG) in England. BSOG is a grant paid to bus operators to help them recover some of their fuel costs. It is simple to administer and provides a direct benefit to passengers by helping operators keep fares lower and service levels higher than would otherwise would be possible, thereby maintaining more comprehensive networks. 3.2. Analysis done by the Confederation of Passenger Transport (CPT) for DfT in 2018 showed its absence would lead to lower levels of network provision, increasing isolation for vulnerable groups such as the elderly and disabled, and those seeking employment. 3.3. The benefits of BSOG extend beyond bus passengers, to other road users and the wider community supporting better economic productivity, social inclusion, environmental sustainability and health. KPMG analysis shows 70% of benefits accrue directly and at point of use to bus passengers through lower fares and higher service levels5. Overall BSOG delivers a high value for money generating between £2.50 and £3.50 in benefits, including wider economic and social impacts for each £1 spent. 3.4. Given its critical importance to continued bus service provision, we do not recommend any immediate changes to its provision. However, over time measures should be taken to reform BSOG so that it is more supportive of zero emission bus investment (such as electric and hydrogen).

Covid-19 Bus Services Support Grant (CBSSG) 3.5. Go-Ahead has welcomed the DfT’s CBSSG funding. This has provided funding to ensure that services continue during the Covid 19 pandemic despite services no longer being commercially viable due to severely reduced demand and social distancing constraints. It has enabled service levels to be restored to levels close to that provided pre-crisis. 3.6. Although passenger numbers have started to build they are still only around 45% of pre crisis levels . It is important for CBSSG to continue in order to maintain service levels. If it were to be withdrawn there a ‘cliff edge’ approach would need to be avoided to allow the transition to be made to network provision more appropriate for lower levels of demand. 3.7. The terms of CBBS do not allow operators to make any profit. Operating buses (unlike trains) is quite asset heavy (we own buses and depots) and the inability to earn profit will prevent investment in these assets and a return on capital. To ensure a sustainable industry the terms should be reviewed and at least a small margin provided (as with rail contracts) to cover risk and encourage investment.

4. How has the pandemic changed these constraints on growth and have you identified any particular opportunities from the Government’s response to the pandemic which might support your business to grow?

4.1. The sustained deployment of an ‘avoid public transport’ by Government in response to Covid 19 was a different approach from that taken by other European countries in response to the pandemic. The confirmation from the Prime Minister in July that anyone can now use public transport was welcome, but in the meantime there has been a shift to car travel that will have negative impacts in terms of air pollution and ultimately public health. 4.2. Figures for 24 August show that car use had recovered to 92% of pre-lockdown levels, whilst rail use was at only 28% and bus use outside London at 45%. A recent report from CBI/KPMG highlighted that ‘without a wide scale return to public transport, congestion will increase, driving down productivity and increasing emissions as a result’1. 4.3. More analysis is now showing the safety of buses and trains, particularly for relatively short distances. A recent study from Imperial College found no evidence of coronavirus on the Tube2, and neither did studies carried out on trains and stations by our colleagues at Southeastern. Studies carried out in Paris and in Austria, covering a total of over 500 identified coronavirus infection clusters, found none that were traceable to using public transport3. A study for Deutsche Bahn showed that – DB study showed no cases contracted on board ICE intercity trains based on German track and trace data and the infection rate for train staff was significantly below the national average. This is, in part, attributed

5 5 The Value of the Bus to Society, Greener Journeys, 2016 https://greenerjourneys.com/wp-content/uploads/2016/10/The-Value-of-the- Bus-to-Society-FINAL.pdf to the high air-exchange rate on board trains compared to many other indoor environments. There are no capacity restrictions in place on this type of train6. 4.4. With face coverings now mandatory, enhanced cleaning in place and extensive communication around hygiene and social distancing, we would like Government to give a much clearer take a more holistic view that appreciates the health benefits of public transport and incorporates this into its messaging. 4.5. With all these measures in place we would like consideration to be given to changing the guidance to enable all seats on buses and trains to be used, with the exception of those in a ‘face to face’ configuration. This would enable public transport to play a fuller role in a green recovery and bring the UK more into in line with practice in other European countries (e.g. France, Italy, Netherlands, Spain). 4.6. We would like to see public money, similar to that spent on the hard hitting ‘avoid’ message, to be spent on a national campaign to encourage a return to the use of buses and trains. 4.7. In the pre-Covid economy, 3.5m people in the UK were travelling to work by bus, and around two- thirds of all public transport journeys being by bus. Buses supported 1.4 billion shopping trips per year, accounting for annual spending of £27bn7. Getting people back on public transport will improve public health, through reduced pollution, more exercise and enabling social interaction. 4.8. Public transport use cuts air pollution by tackling the road congestion that arises from increasing car dependency. Air pollution has been described by Public Health England as the biggest environmental threat to public health, with between 28,000 and 36,000 deaths a year attributed to long-term exposure8. Analysis from both Harvard University9 and the University of Birmingham10 has found that high levels of air pollution increase the risk of death from Covid 19. Recent research from the University of York showed that the reduced congestion from lower than normal traffic levels was keeping air pollution from returning to pre-Covid levels11; this will be at risk if the further reopening of the economy and education is predominantly car based. 4.9. Research undertaken by Go-Ahead in partnership with the University of Leeds and RunFriendly showed that public transport users typically accumulate 24 minutes of physical exercise per day, improving public health outcomes and reducing NHS treatment costs, such as obesity.

5. Thinking about the Government’s 2018 Industrial Strategy please can you confirm whether:

a. The strategy had any direct relevance to your business and, if so, what? b. It’s relationship with local industrial strategies and their respective owners (such as Local Enterprise Partnerships and Growth Hubs) ultimately persuaded your business to take any specific decisions that it might not have done, but for the Industrial Strategy/Local Industrial Strategy c. You consider the Industrial Strategy, as defined, to be fit for the new future we now face?

5.1. Transport is a key enabler to much of the Government’s Industrial Strategy, in the provision of access for workers and customers to local developments. However, the paradox is that its ‘enabler’ status means it is often viewed as secondary, and the focus on capital over revenue funding means the IS doesn’t tend to provide support for projects that are relatively easy to deliver (e.g. new bus services). 5.2. Our bus operators engage extensively with LEPs but the Industrial Strategy’s long term focus often emphasises the revolutionary over the evolutionary schemes that we can provide, often involving greater use of technology (e.g. Air Filtering Bus, geo-fencing electric buses). 5.3. With LEPs selecting project sponsors according to their ambition, such as Oxfordshire’s of becoming 'one of the top three global ecosystems for innovation by 2040', transport projects that are key enablers to development may miss out on funding because they are not sufficiently futurist in nature. 5.4. A more holistic approach to regional funding, with economic development enabled by budgets covering both capital and revenue elements, including plans agreed in local Strategic Transport Forums, would be better placed to deliver clear outcomes in the short and medium term. A greater

6 https://www.researchgate.net/publication/342353367_Preliminary_Implications_of_COVID-19_on_Long- _Distance_Traffic_of_Deutsche_Bahn 7 The Value of the Bus to Society, Greener Journeys, 2016 https://greenerjourneys.com/wp-content/uploads/2016/10/The-Value-of-the- Bus-to-Society-FINAL.pdf 8 Public Health England air pollution review March 2019 https://www.gov.uk/government/news/public-health-england-publishes-air- pollution-evidence-review#:~:text=Air%20pollution%20is%20the%20biggest,lung%20cancer%2C%20and%20exacerbates%20asthma. 9 https://www.medrxiv.org/content/10.1101/2020.04.05.20054502v2 10 https://www.thetimes.co.uk/edition/news/air-pollution-found-to-raise-covid-death-risk-czm0jqfm6 11 https://www.theguardian.com/environment/2020/jul/10/uk-air-pollution-still-down-despite-return-normal-traffic-study emphasis on quick wins and deliverability is needed to ensure the IS is better designed for the future we now face.

6. Turning to think about your people, in-work training and the skills agenda: a. Is your workforce equipped with the skills your business needs for the future? b. For instance, do your managers have the necessary managerial skills and your workers the required levels of digital literacy? c. If not, how do you invest in their training in-work? How could this be improved?

6.1. Building on Go-Ahead Group’s broader health and safety programmes across bus and rail, we are placing particular emphasis on taking forward our future skills pipelines, focused on retaining and expanding participants in our graduate schemes. 6.2. A major challenge faced is around likely gaps in digitalisation especially among bus companies where a significant investment would be needed in terms of IT infrastructure and training, especially for an ageing work force. 6.3. Supervisor behavioural training launched in 2019 and continues through 2020 to support bus supervisors in dealing with: confrontation, assertion and empathy, in line with Go-Ahead Group values. This training is currently on hold due to Covid-19 as this training is necessarily face-to-face. e. Have you used local business networks or partnerships with local education institutions to train your staff? Has this been useful, and could it be improved?

6.4. Go-Ahead partners with local suppliers and colleges through our core apprentice schemes across our bus and rail divisions. 6.5. This year we are recruiting a record-number of 1,200 apprentices, accelerating the recruitment to roles across the UK. This will represent a 20 per cent increase on the number hired in 2019. Recent recruits include mothers returning to work, a former mental health counsellor and a prison worker. The target links to our commitment to diversity; two-thirds of Go-Ahead London (bus) apprentices come from BAME background, and nearly one-third of GTR’s operational apprentices are women. f. Are you able to effectively use your Apprenticeship Levy (if applicable)? If not, why not? What would you like to use it for?

6.6. Go-Ahead Group is using the levy as the guidelines suggest for a large employer, but we would benefit from more flexibility to spend the levy so we can use more local resources and provisions. The DAS system requires significant administrative time and there is little flexibility around the system. g. Do you have concerns about the skills capacity of your supply chain? Is there anything your business could do to help?

6.7. Go-Ahead has an ongoing internal strategic review of its supply chain, aiming to focus more on regional service delivery. We have signed a Charter that we will not partner or contract with companies who employ methods such as zero-hour contracts in line with the Group’s Modern Slavery Statement.

7. How do you envisage improving the productivity of your business and your people in the coming years? What has stopped you from doing this in the past?

7.1. We continue to focus on looking at all aspects of our operations to see how we can increase efficiency whilst providing high standards of customer service and continuing to progress towards zero emissions 7.2. The biggest external impact on the productivity of our bus services is road congestion, as outlined in section 1. Without action from national and local Government, including through a National Bus Strategy, this is likely to re-emerge as a significant issue in the months ahead.

For any further information please contact Gavin Bostock, Go-Ahead Group Head of Public Affairs

September 2020