Bus Services After the Spending Review

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House of Commons Transport Committee

Bus Services after the Spending Review

Eighth Report of Session 2010–12

Volume I: Report, together with formal minutes, oral and written evidence

Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/transcom

Ordered by the House of Commons to be printed 12 July 2011

HC 750 Published on 11 August by authority of the House of Commons London: The Stationery Office Limited £22.00

The Transport Committee

The Transport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Transport and its Associate Public Bodies.

Current membership Mrs Louise Ellman (Labour/Co-operative, Liverpool Riverside) (Chair) Steve Baker (Conservative, Wycombe) Jim Dobbin (Labour/Co-operative, Heywood and Middleton) Mr Tom Harris (Labour, Glasgow South) Julie Hilling (Labour, Bolton West) Kwasi Kwarteng (Conservative, Spelthorne) Mr John Leech (Liberal Democrat, Manchester Withington) Paul Maynard (Conservative, Blackpool North and Cleveleys) Gavin Shuker (Labour/Co-operative, Luton South) Iain Stewart (Conservative, Milton Keynes South) Julian Sturdy (Conservative, York Outer)

The following were also members of the committee during the Parliament.

Angie Bray (Conservative, Ealing Central and Acton) Lilian Greenwood (Labour, Nottingham South) Kelvin Hopkins (Labour, Luton North) Angela Smith (Labour, Penistone and Stocksbridge)

Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk.

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The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only.

Committee staff The current staff of the Committee are Mark Egan (Clerk), Marek Kubala (Second Clerk), David Davies (Committee Specialist), Tony Catinella (Senior Committee Assistant), Edward Faulkner (Committee Assistant), Stewart McIlvenna (Committee Support Assistant) and Hannah Pearce (Media Officer).

Contacts All correspondence should be addressed to the Clerk of the Transport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6263; the Committee’s email address is [email protected]

Contents

Report Page

Summary 3

1 Introduction 5

2 Bus industry: structure and funding 7 Commercial and subsidised bus services 7 Funding and costs 7

3 Impact of the Spending Review 9 Consultation with local communities 16

4 Alternative public transport provision 19 Community transport 19 ‘Area-based integration’ transport 22

5 Concessionary travel scheme 23

6 Conclusion 26

Conclusions and recommendations 27

Annex: the value of bus services 30

Formal Minutes 32

Witnesses 33

List of printed written evidence 33

List of additional written evidence 34

List of unprinted evidence 37

List of Reports from the Committee during the current Parliament 38

Summary

Buses are the most available and frequently used mode of public transport in England, carrying two thirds of all passenger journeys, yet they remain a comparatively undervalued mode of transport. The Government’s 2010 Spending Review included three decisions with implications for the funding of the English bus industry: first, a 28% reduction in local authority revenue expenditure, second, changes in the formula for concessionary travel reimbursement, and finally, a 20% reduction in the Bus Service Operators’ Grant (BSOG) from 2012–13. Our inquiry examined the funding of bus services in England (outside London) in the light of the Spending Review.

The combination of the reduction in local authorities’ revenue expenditure and changes to the Department for Transport’s concessionary fares reimbursement guidance in 2011–12, with the 20% reduction in BSOG in 2012–13, has created the greatest financial challenge for the English bus industry for a generation. The combined impact of these funding changes will, in some parts of the country, have a disproportionately adverse impact on the provision of local bus services and the level of bus fares.

As a result of these budgetary pressures, over 70% of local authorities have already decided to reduce funding for supported bus services. The extent of the reductions varies considerably, although, in general, rural, evening and Sunday bus services will be most affected. In the most extreme cases, some local authorities have decided to withdraw all their subsidised bus services. Some local authorities have withdrawn services with inadequate or no consultation. The evidence we have received from bus users around the country demonstrates the anger and concern that people feel about the impact of these decisions on their everyday lives. Some of the most vulnerable people in society, including the elderly, will be most affected by these changes.

We recommend that the Department for Transport, in conjunction with the Local Government Association (LGA), collate information about the decisions taken by local transport authorities in respect of tendered bus services in 2011–12 across England. The Department should seek information about the provision of alternative transport modes, such as community transport, in those areas where local authorities have scaled back tendered services, due to budgetary reductions. The Department should identify examples of best practice of local authorities that have responded innovatively to budgetary pressures to provide a cost-effective, flexible mix of local transport services, which provide an acceptable level of public transport for people who might otherwise be isolated. The LGA should play a key role in disseminating these examples of best practice across local authorities.

The evidence is unclear about the impact of the Spending Review on commercial bus services. The facts need to be established for the effect of these policy changes to be accurately measured, and for future decisions to be soundly based. The Department for Transport, in conjunction with the LGA, should compile details from local authorities about the impacts of the Spending Review on commercial bus services in England, outside London, in 2011–12. A similar exercise should be conducted following the implementation of the reduction in BSOG in 2012–13. We welcome the Department of Transport’s

commitment to review the arrangements for BSOG more broadly. As part of this review, the Department should consider whether targeting BSOG in a different way, possibly through greater devolution to the local level, would improve the current approach.

Bus services are often an integral part of the local community. It is only right, therefore, that local people should have the opportunity to voice their opinion if the local authority or integrated transport authority proposes significant changes to bus services that it supports. Some local authorities have faced very significant reductions in their revenue budgets, but it is important that local people are properly consulted when significant changes are being proposed to their bus services. Local people should have the opportunity to give their views on the relative importance of different bus services and to suggest innovative approaches. We call on the Department to task Passenger Focus to develop a ‘consultation toolkit’ for local authorities within the next six months. This should provide best practice guidance on how local authorities can hold meaningful consultation processes with local communities about bus service proposals.

The growth of the community transport sector could mitigate, to a degree, the effects of the loss of subsidised bus services. We welcome the Department for Transport’s decision to allocate £10 million to rural local transport authorities to encourage the growth of community transport in their area. However, the evidence suggests that community transport schemes are unlikely to replace more than a small fraction of withdrawn local authority-subsidised bus services. Community transport operators are themselves often reliant on public funding. If the Government genuinely wants to encourage the growth of the community transport sector, it should legislate to permit the use of the concessionary pass on a wider range of community transport services.

There is evidence of some potential for local authorities to reduce costs through better co- ordination, planning and delivery of different types of transport services, including public buses, community transport, education, social care and health. The Government should identify ways to overcome the barriers (including regulatory or legislative barriers) to co- ordination, drawing on good practice around the country. It is also clear that closer partnership working between local authorities, bus operators and community transport operators will be necessary post-Spending Review, in order to better utilise diminished resources. We encourage local authorities and integrated transport authorities to use the provisions within the Local Transport Act as means to achieve better partnership working, where necessary.

We endorse the Government’s commitment to protecting the entitlement for free bus travel for elderly and disabled people. It is obvious that the concessionary fares scheme is highly valued by users and the evidence suggests the scheme provides a number of social, economic and environmental benefits. There is likely to be scope for further cost savings in the management and administration of the scheme, particularly with advancements in smartcard technology, and there may be a case for a one-off payment for the card. We strongly believe, however, that the provision of free bus travel for the elderly and disabled is to be valued. We recommend that the Department of Transport commission further detailed research into the benefits, and usage, of the concessionary fares scheme.

1 Introduction

1. Buses are the most available and frequently used mode of public transport in England. Two-thirds of all passenger journeys are made by bus: there were 4.6bn bus passenger journeys in England in 2009–10 (2.4bn outside of London), compared to 1.3bn rail and 1.1bn London Underground journeys.1 A quarter of UK households do not have access to a car, including one in ten households in rural areas.2 We received a great deal of evidence, including from bus users, about the economic, social, environmental and other benefits provided by local buses. A selection of these views is provided in the Annex.

2. Yet buses remain an undervalued mode of public transport and, unlike other modes such as rail, bus users lack a distinctive influential lobbying voice. We were told that, despite buses being the most used mode of transport, “central and local government policy and public opinion all tend to neglect their contribution until, as at present, dramatic change is necessary”. Bus policy was considered to “drift [...] punctuated only by the significant changes necessary to meet regulatory reform or budgetary restrictions”.3 Certainly, on this occasion, it has been budgetary pressures that have pushed bus policy up the agenda once again.

3. The Coalition Government’s Spending Review in October 2010 included three decisions with implications for the bus industry:

• an overall 28% reduction in local authority revenue expenditure from 2011–12;

• changes in the formula for concessionary travel reimbursement from 2011–12;

• a 20% reduction in the Bus Service Operators’ Grant from 2012–13.

4. We launched our inquiry into the funding of bus services in England (outside London) in November 2010 in the light of the outcome of the Spending Review.4 We received written evidence from 141 organisations and individuals. Oral evidence was heard between January and May 2011. We are grateful for all those who contributed evidence, both written and oral. We were advised throughout by Peter Hardy of JMP Consultants Ltd, an independent transport consultancy.5

5. From the outset of our inquiry, we were keen to hear the views of bus users about proposed changes to local services. In collaboration with the Parliamentary Outreach

1 Department for Transport statistics, tables BUS 0103,TSGB0102, available at www2.dft/gov.uk/pgr/statistics 2 Department for Transport, National Travel Survey, tables NTS 0205, NTS9902 3 Ev 80 4 Our terms of reference were to examine: the impact of the reduction in Bus Service Operators’ Grant, including on community transport; the impact and 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; 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; and how passengers’ views are taken into account in planning bus services, and the role of Passenger Focus in this area. 5 Mr Hardy made formal declarations of interests which can be found in the formal minutes of the Transport Committee, Session 2010–12, Appendix B

service, we alerted the public to our inquiry through the distribution of leaflets in libraries and citizens’ advice bureaus, and the use of Parliament’s Facebook page. We responded to several petitions about local bus services presented in the House of Commons by Members of Parliament. We also took oral evidence from a panel of bus users. The plethora of evidence we received from bus users proved extremely valuable to our inquiry, not only to illustrate the importance of local bus services but to give us an up-to-date account of the changes occurring across the country.

6. We decided not to focus on the broader issue of the regulation of the bus industry, in part because the Competition Commission was holding its own investigation into this matter in parallel to our inquiry.6 We specifically focussed on bus services in England outside London.7 The franchised, regulated London network, which is the responsibility of the Mayor of London, is very different to the largely deregulated structure of bus service provision elsewhere in England. Bus services in London have, in general, not been affected as significantly by the outcome of the Spending Review as services outside the capital.8

6 The Competition Commission published its provisional findings in June 2011. 7 Responsibility for local bus services is devolved in Scotland, Wales and Northern Ireland. 8 Transport for London’s (TfL) overall grant funding from the Department for Transport was reduced by £2.17bn over the four years of the Spending Review, or 21% in real terms in 2014–15 compared to the base year of 2010–11. However, the overall DfT grant is just one element of TfL’s funding, which also includes fares, borrowing and other sources of revenue, such as advertising and commercial partnerships. The Greater London Authority says that the reduction in DfT grant funding has, in part, been covered by increased ridership on the Tube, bus and rail network. “Mayor secures vital London transport investment and protects frontline services”, Greater London Authority press release, 20 October 2010.

2 Bus industry: structure and funding

Commercial and subsidised bus services 7. Outside London, bus operators choose the routes and levels of service that they wish to provide on a commercial basis. Local authorities then determine where the gaps are and can choose to provide support for services to fill these gaps. Around 80% of bus services outside London are operated on a commercial basis.9 The remaining 20% are operated with support from local authorities, generally secured through a system of competitive tendering. Such services typically comprise routes at times of the day or week, or in areas, where usage is low—often services on evenings, Sundays and routes in rural areas.10 Local authority-subsidised bus services in England (outside London) have increased mileage by 25% over the last 10 years, whilst the mileage of commercial bus services reduced by 18% over the same period. Norman Baker MP, Parliamentary Under-Secretary of State for Transport, implied that this trend was caused in part by bus companies withdrawing marginally commercial services in the expectation that they would be re-tendered with a subsidy from the local authority.11 Many tendered services are not viable without local authority support, due to insufficient usage and fares revenue.

8. The proportion of tendered services varies by local authority, from zero (for example, Southend) to 100% (for example, Rutland), and it is notably high in some local authority areas—around 85% of services in Somerset, for example, received at least some subsidy prior to the Spending Review.12

Funding and costs 9. In 2009–10 annual operating revenue for the bus industry in England (outside of London) was £3.4 billion. This includes fares revenue, Bus Service Operators Grant (BSOG), concessionary fare reimbursement and local authority support (mainly though tendered service contracts). It does not include streams of bus operator revenue not directly related to the provision of local bus services, such as advertising income and private hire work. In 2004–05 the comparable amount was £2.8 billion (in 2009–10 prices) and the amount has increased year-on-year since then, mainly due to the increase in bus use by concessionary pass holders following the introduction of the free concessionary travel scheme.13

10. Table 1 shows that over half of bus operating revenue (outside London) comes from passenger fares (£1.8 billion). Concessionary fares reimbursement accounts for almost a quarter of revenue (£800 million), local authority support (mainly through tendered contracts) 15% (£500 million) and BSOG 9% (£300 million). Almost half of bus operating revenue, therefore, comes from public funding in one form or another: although a

9 Ev 64, para 54 [Department for Transport] 10 Ev 147, para 31[Professor Peter White] 11 Q 267 12 Ev 105, para 1.5.4 [TAS Partnership Ltd] 13 Ev 64

significant proportion of this is concessionary fares reimbursement, which aims to replace the on-bus fares revenue that would have been received if a government policy to provide free travel for elderly and disabled people did not operate.

Table 1: Bus Operating Revenue in England (outside London), 2009–10

Fares Concessionary Local Bus Service Total travel authority Operators subsidy Grant

2009–10 £1.8 billion £800 million £500 million £300 million £3.4 billion

Proportion of 53% 24% 15% 9% 100% total

Source: Department for Transport (Ev 70)

3 Impact of the Spending Review

11. Three announcements in the Government’s 2010 Spending Review will have an impact on bus industry funding:

• A 28% reduction in local authority revenue spending (Formula Grant) from 2011– 12, combined with the ceasing of ring-fencing for some types of bus provision such as the Rural Bus Subsidy Grant. As a result, the provision of tendered bus services must now compete with other (statutory and non-statutory) priorities for local authority funding from a single, typically reduced, pot of money. In January 2011, the TAS Partnership estimated that English local authorities outside London could, as a whole, reduce bus subsidy funding by a quarter, or £125m per annum.14 By February local authorities had confirmed reduction in bus subsidies amounting to £44m.15

• Changes in concessionary travel reimbursement arrangements from 2011–12. The Department for Transport (DfT) issues discretionary guidance for local authorities to use when deciding the level of reimbursement that bus operators receive for carrying elderly and disabled passengers. Based on research commissioned by DfT, new guidance was issued in November 2010 better to reflect levels of reimbursement required to ensure that bus operators were no better or worse off through their participation in the concessionary fares scheme. If followed, the changes set out in the guidance would result in an overall reduction in reimbursement in the range of £54m to £100m per annum, with a best estimate of £77m.16 Alongside this change, the Government transferred responsibility for administering the reimbursement scheme from lower-tier to upper-tier authorities. Under the new arrangements all 27 counties in two-tier areas receive less formula grant for concessionary fares than the sum spent by district councils in their area in 2010–11.

• A 20% reduction in BSOG from 2012–13. BSOG is a grant paid by the DfT to reimburse bus operators for some of the excise duty paid on fuel consumed. It represents about 9% of all income for the English bus industry outside London; the reduction could remove £60m per annum from the industry.

12. The total reduction in revenue for the English bus industry following the Spending Review is still unclear and difficult to predict, but it could be in the region of £200m to £300m per annum. The changes to formula grant and concessionary fares reimbursement both commenced at the beginning of the 2011–12 financial year, and, whilst taking evidence between November 2010 and March 2011, we began to receive details of changes being proposed by local authorities and commercial operators to local bus services. Several local authorities implemented changes to their tendered bus networks from April, although others delayed making decisions until after local elections were held in May. Some local

14 Ev 105, para 1.7.2 [TAS Partnership Ltd] 15 Ev 96 16 Ev 64, para 29. Not including London.

authorities are protecting the funding of local bus services in 2011–12 but have signalled their intent to make reductions in 2012–13. A survey by the Association of Transport Co- ordinating Officers (ATCO) found that local authorities intend to make deeper cuts to bus subsidies in 2012–13 than in the current year.17 Local authorities seem destined to make deeper cuts to their tendered bus service budgets in 2012–13 than the current year. We call on the Department for Transport and the Local Government Association (LGA) to implement the recommendations in this Report as a matter of urgency. We recognise that the scale of local authority budgetary reductions in some areas mean that cut-backs are inevitable. It must be demonstrated—not least for the benefit of bus users around the country—that lessons have been learned from the mistakes made during the current round of cuts to bus services.

13. By June 2011, over 70% of English local authorities had decided to reduce funding for supported bus services.18 The extent of the reductions varied considerably, although, in general, rural, evening and Sunday bus services were most affected.19 In the most extreme cases, Cambridgeshire and Hartlepool councils decided to withdraw all their subsidised bus services (saving £2.7m and £290,000 respectively)—although Cambridgeshire County Council has since agreed to review its decision following a legal challenge.20 Other councils such as Northamptonshire,21 Shropshire,22 North Yorkshire, and Somerset, significantly reduced funding for subsidised bus services: in the last two cases, the councils controversially withdrew all evening, Sunday and Bank Holiday services.23 Some authorities, such as Devon, opted to reduce the frequency of subsidised services rather than withdraw them.24 Some local authorities, such as East Riding, Kent, Luton and Peterborough, did not reduce bus services at all.25

14. The LGA told us that the reduction in formula grant had been the main driver behind local authorities’ decisions.26 We heard that local authorities had to protect statutory services, such as social care, in the first instance, and provision of tendered bus services was not statutory. Devon County Council argued: “the cuts are not a reflection of the fact that

17 Q 180 18 Campaign for Better Transport, Save Our Buses Campaign, June 2011, www bettertransport.org.uk. Sourced primarily through local authority minutes and press notices. 19 For example, Q 112 20 Cambridgeshire County Council agreed in February 2011 to phase out its subsidised bus services over a four year period. £220,000 was committed to community transport for 2011–12 and 2012–13, although it has been suggested that the Council intended to spend a total of £1m on community transport measures over the five-year period. On 5 July the Council agreed to review the decision, following a claim for Judicial Review made by a local resident which was supported by the Campaign for Better Transport. No further bus subsidy reductions will now be implemented until 2012–13. See also footnote 54. Ev 96, Ev w126. 21 Northamptonshire County Council has withdrawn its Rural Bus Subsidy Grant of £3.1 million. The Council has provided £1 million funding for demand-responsive transport services, which may include fixed-route bus services. Ev w148 22 See Ev w146 23 Q 183. Somerset County Council agreed a reduction in the bus subsidy budget from £5.2m to £2.8m. A further reduction of £1.4m is expected over the next two years. Ev w149 24 Q 185 25 Q 244 26 Q 189

the council doesn’t value public transport. It is to do with the maths of what is left when you have undertaken your statutory responsibilities”.27

15. We heard that commercial bus services had also been affected by the Spending Review. Large and smaller bus operators, such as Arriva and Norfolk Green, told us that they had been forced to make changes mainly due to a reduction in reimbursement revenue following the DfT’s changes to concessionary fares guidance,28 although the cancellation of tendered contracts29 and fuel price increases30 also played a part. Rural services again had borne the brunt of the impact. Arriva increased fares by 6–8% and reduced mileage by 6– 7% in parts of the country.31 Norfolk Green, a rural-based operator, reduced bus mileage by 4–5% due to a 7% reduction in its funding in 2011–12.32 We were told that fare increases were less acute in the Passenger Transport Executive areas.33 Bus operators argued that the cancellation of local authority tendered bus services had knock-on implications for commercial services because, for instance, people would no longer catch the morning bus to work if there was no guarantee of an evening service back home.34

16. A common theme in the evidence was that it was the combined impacts of the Spending Review funding changes that were proving most challenging to the bus industry: Arriva described the situation as “death by a thousand cuts”.35 Some operators and other witnesses believed that the impact of the 20% BSOG reduction in 2012–13 would be manageable,36 but others, such as Arriva and Stagecoach, argued that this too would lead to service reductions and/or above-inflation fare increases.37

17. Bus users from around the country, from different sections of society, wrote to us about the impacts of local authority and commercial operator decisions. We were given direct examples of how reduced or withdrawn local bus services had made people more socially isolated,38 in some cases removing the only bus link between their village and the nearest town.39 Elderly people described how withdrawn services had reduced their access to hospitals and health facilities,40 social activities,41 and opportunities for shopping.42 Several

27 Q 190 28 Qq 107, 112, 116 29 Q 118 30 Qq 132, 134. Compass Travel in West Sussex said a 10% fare increase would only cover a 3p increase in fuel prices. 31 Qq 110, 116–17 32 Q 108 33 Q 117 34 Ev 80, 133. See also “Tendered service cuts threaten commercial services”, Local Transport Today, 570, 6–19 May 2011, p 3 35 Q 144. See also Ev 135. 36 Ev 135, paras 2.1–2.5; Ev 147, para 19 37 Ev 57, para 3.2; Ev 132, para 4 38 Ev w125 [Mrs J Robertson], w138 [Mrs M E Sim], w139 [Mr and Mrs Hale; C Olley] 39 Ev w143 [Miss A Raw] 40 Ev w117, w134 [Mrs J Robinson], w135 [Mrs J Thompson], w138 [Mrs M E Sim], w139 [Mrs H Oliver], w141 [Mr K Gregory] 41 Ev w138 [G Wainwright] 42 Ev w138 [Mrs M E Sim]

could not drive nor afford taxis on a regular basis.43 People could no longer visit or assist sick relatives as frequently.44 Commuters described the difficulties they now faced to return home from work in the evening following the curtailment of their local bus service after 7pm.45 We were given examples of younger people changing their employment due to bus service reductions and withdrawals,46 or no longer being able to socialise,47 play sports48 or access educational facilities in neighbouring towns, reducing their independence.49 A parent told us how the proposed withdrawal of her local bus service would make it very difficult to take her young children to playgroup.50 Bus reductions were said to impact on local tourism.51 Witnesses complained about the impact of above-inflation fare rises.52

Mrs C Olley, 80, Hartlepool: “I appreciate that spending reviews were needed and accept a reduced service but to discontinue the service altogether is appalling”.

Ms J Robertson, North Yorkshire: “Just imagine removing buses and tubes from London, there would be an enormous out-cry! We may be a less dense population up here, but our buses are vital to our way of life.”

Ms V Boulton, North Yorkshire: “Left to North Yorkshire County Council, society would be cut in two on a Sunday—those who have a car and those who do not”.

Andrew Turpin, Somerset: “The loss of the Sunday 30a bus service to Taunton means that most Sunday afternoons I have to cycle the very steep Tytherliegh hill on the busy A358 (a five mile journey and a prospect I don't relish) in order to get back to Tatworth. I am 65 and have had a quadruple heart bypass.”

Miss A Raw, Hartlepool: “The bus service from Elwick to Hartlepool has been withdrawn leaving the village completely cut off from Hartlepool. I do not drive and therefore am finding it very difficult to shop for essentials, visit doctors, dentists, opticians, banks, hospital visits etc. Also I no longer visit friends, go to the theatre, or cinema, especially in the evening. In fact we are completely isolated”.

Mr K Gregory, Somerset: “Recent changes to funding for bus provision mean there will be no evening services or indeed, Sunday services. My wife and I rely on bus services to make—and keep—hospital and clinic appointments; hospital visiting; family visits; and, for a number of leisure pursuits”.

Mrs J Robinson, Hartlepool: “I am a carer for my 85 year old father who has just

43 Ev w134 [Mrs J Robinson], w139 [Mrs H Oliver; Mrs C Olley], w148 [Mr P Gibson] 44 Ev w134 45 Ev w142 46 Ev w119 47 Ev w134, w146 48 Ev w142 [G Hutchinson] 49 Ev w120, w122, w134, w146 50 Ev w142. See also Ev w154. 51 Ev w50, w115, w116 52 Q 235, Ew101

undergone an operation for bowel cancer and also has heart problems. I used to get the 516 bus service (this has now been completely withdrawn). It now costs me £11 per day by taxi so am only visiting my father three days a week which is leaving him alone four days in each week”.

Mrs M Sim, Hartlepool: “I wish to bring to your attention how the loss of a bus service in our village of Elwick, Hartlepool has severely affected my life. I have no transport during the day seven days a week so therefore I am unable now to shop, visit a doctor, dentist, keep hospital appointments or socialise”.

Mrs J Power, Hartlepool: “Since the removal of the bus service my daughter now has no way of getting to and from college. Is she surely not entitled to the education she deserves? My daughter works very hard and gets excellent grades and I feel appalled that her future education is being jeopardised in this way!”

18. The Passenger Transport Executive Group (pteg) argued that widespread bus service reductions could undermine other government policies:

One of the big challenges is that there is an assumption in [Government] Departments outside Transport, such as Health, Education, Business, Innovation and Skills, etc, that bus services will be there. Bus services will get people to hospital, health facilities, colleges, schools, and to work. But if those bus services are declining because of funding restraints from the Department for Transport, that will undermine policies which are basically about choice.53

Bus Users UK questioned whether local authorities could reconcile massive funding reductions for bus services with their duties under the 1985 Transport Act to “ensure bus services are provided where they are socially necessary and would not otherwise be provided commercially.”54

19. The Minister accepted that local authorities had been presented with a “challenging settlement”, but said that the Department had been “careful” to ensure the Spending Review did not have an undue impact on bus users. He noted a “varied picture” across the country, which was “a reflection of the new localism agenda and the ability of councils to make their own choice as to what is important for them in their areas”. The Minister said that some councils, such as Surrey, had shown “imagination” in protecting bus services, and he stressed that some councils had not reduced bus services at all. However, he described it as a “major concern [...] how one or two local authorities appear to have decided to cut drastically their bus services without very much consideration of the consequences”.55 Some councils, he believed, had decided to save money

53 Q 208 54 “Bus Users UK questions legality of funding cuts for bus services”, Bus Users UK Press Release, 18 March 2011. Legal action was taken against Cambridgeshire County Council in May 2011 based on failure to comply with its duties under the Transport Act 1985, Race Relations Act 1976, the Sex Discrimination Act 1975 and the Disability Discrimination Act 1995. The Council subsequently decided to review its decision to withdraw all subsidised bus funding. “Council faces legal challenge over bus cuts”, Campaign for Better Transport Press Release, 11 May 2011. See also footnote 20. 55 Qq 243–44, 248, 285

“disproportionately” from bus services in order to protect other services, although the Minister emphasised that it was their right to do so:56

We have to accept that in the new era we are in that it is not possible for central Government, on the one hand, to give local councils freedom and then to criticise them when we do not think they are doing the right thing and just say, “We’ve decided you won’t have the freedom after all. We will take the power back in the centre.” They have to be free to make their own mistakes, if you like.

Personally, I would regard it as very regrettable if individual councils decided to withdraw all subsidised services. I think it would be a mistake if they were to do that in terms of looking after their individual populations. But, ultimately, it is their judgement to make and not mine.57

Central government’s role, he argued, was not to specify centrally minimum levels of provision, but to “put in place the architecture to ensure that we send the right signals both to the industry [...] and local authorities”.58

20. The combination of the reduction in local authorities’ revenue expenditure and changes to the Department for Transport’s concessionary fares reimbursement guidance in 2011–12, with the 20% reduction in Bus Service Operators’ Grant (BSOG) due to be implemented in 2012–13, has created the greatest financial challenge for the English bus industry for a generation. The combined impact of these funding changes will, in some parts of the country, have a disproportionately adverse impact on the provision of local bus services and the level of bus fares.

21. In these circumstances, some local authorities have withdrawn services with inadequate or no consultation. The evidence we have received from bus users around the country demonstrates the anger and concern that people feel about the impact of these decisions on their everyday lives. Some of the most vulnerable people in society, including the elderly, will be most affected by these changes.

22. It is important for central government to gain a better understanding of the decisions taken by local authorities in respect of the tendered bus networks in their own areas.59 Local authorities have faced widely varying degrees of budgetary reductions. We recommend that the Department, in conjunction with the Local Government Association, collate information about the decisions taken by local transport authorities as a consequence of these reductions in respect of tendered bus services in 2011–12 across England. The Department should seek information about the provision of alternative transport modes, such as community transport, in areas where local authorities have scaled back tendered services. The Department should identify examples of best practice of local authorities that have responded innovatively to budgetary pressures to provide a cost-effective, flexible mix of local transport services, which provide an acceptable level of public transport for people who might otherwise

56 Qq 244–45, 285 57 Q 246 58 Q 246 59 Q 272

be isolated. The LGA should play a key role in disseminating these examples of best practice across local authorities. These findings should be made public.

23. The Minister claimed that commercial bus services were generally not “under threat” because of the way that BSOG had been restructured. Contradicting the statements given by bus operators, the Minister argued that commercial services would “continue largely without change in terms of services or even fares”. The DfT’s new concessionary fares guidance was “more accurate” than the previous guidance in ensuring that bus companies were no better or worse off from administering the scheme, as required legally.60 The Competition Commission recently commended the DfT’s new guidance and recommended that it be “followed to the greatest extent possible”.61 We also note that, by June, bus operators had lodged only 29 appeals against local concessionary travel authorities: a much lower figure than in most recent years.62

24. The Minister’s assertion that commercial services would be largely unaffected by the Spending Review contradicts the evidence we have received from the bus industry giving examples of above-inflation fare increases and service reductions. The real facts need to be established for the effect of these policy changes to be accurately measured, and for future decisions to be soundly based. The Department for Transport, in conjunction with the LGA, should compile details from local authorities about the impacts of the Spending Review on commercial bus services in England, outside London, in 2011–12. A similar exercise should be conducted following the implementation of the reduction in BSOG in 2012–13.

25. BSOG helps ensure that, on average, bus fares are around 7% lower and bus service levels 7% higher than they otherwise would be outside London.63 Prior to the Spending Review many in the bus industry feared that the Government would abolish the provision of BSOG entirely. The Minister argued that the 20% BSOG reduction in 2012–13 was, in the current context, a “good achievement” for the Department. The reduction had been mainly driven by the need to reduce costs rather than a “philosophical dispute about BSOG”.64 Several witnesses, including the Chartered Institute of Logistics and Transport (CILT), LGA, pteg, and the Local Government Technical Advisors’ Group, whilst supportive of the continuation of the grant, suggested that BSOG should be devolved to a local level and merged into a single ring-fenced funding stream that could be targeted to meet local priorities.65 The Minister accepted that there was scope to reform BSOG more substantially in the future.66 The Government is currently reviewing the arrangements for how BSOG is distributed. It intends to complete this work by March 2012.67 We appreciate the concerns of the bus industry that the reduction in BSOG next year may, combined

60 Qq 246, 255 61 Competition Commission, Local Bus Services Market Investigation: Provisional Findings Report, May 2011, p 12-61 62 “Bus operators show little appetite for concessionary fares appeals”, Local Transport Today, LTT572, 3–16 June 2011, p 1 63 Ev 64 64 Q 251 65 Ev w2, 80, 101, 139 66 Q 251 67 Department for Transport, Business Plan 2011–2015, November 2010, p 10; Q 277

with other recent funding changes, affect the viability of some commercial services. We welcome the Department of Transport’s commitment to review the arrangements for BSOG more broadly. As part of its review, the Department should consider whether targeting BSOG in a different way, possibly through greater devolution to the local level, would improve the current approach.

Consultation with local communities 26. Current legislation encourages local authorities, where they deem it appropriate, to involve and consult individuals, groups, businesses or organisations likely to be affected by their actions.68 The consultation undertaken by local authorities following the Spending Review was, according to Passenger Focus, “very patchy”.69 Whilst some local authorities such as Central Bedfordshire Council undertook detailed and comprehensive consultation processes,70 others either held unsatisfactory consultation processes or, in some cases, did not consult local people at all.71 Bus users from the Somerset area told us that the County Council did not properly consult local people about significant reductions to the tendered bus network.72 North Yorkshire County Council held a 12-week consultation but only one option was offered;73 and the outcome ignored the overwhelming majority view of the consultees.74 Cumbria County Council reduced tendered bus services with little consultation or warning.75

Mr T Reese, Somerset: “The changes to bus services in Somerset this spring are devastating, and were introduced with no consultation”.

Mr and Mrs Banks, Hartlepool: “What has so dismayed the village is the arbitrary way in which the local authority totally withdrew its subsidy without, it seems, any consideration of the effects such a decision would have”.

Ms J Robertson, North Yorkshire: “I agree that some savings could be made but to just scrap services without a proper consultation of the users is not fair.”

68 Local Government and Public Involvement in Health Act 2007, section 138. This requires authorities to take those steps they consider appropriate to involve representatives of local persons in the exercise of any of their functions, where they consider it is appropriate to do so. 69 Q 84 70 Passenger Focus told us that Worcestershire, Surrey and Central Bedfordshire County councils provided good information as part of their consultations. Surrey, Telford & Wrekin and Norfolk made significant changes in the light of consultation responses from passengers. Ev 96, Summary 71 Q 84, Ev 87, 96 72 Ev w123, Q 221. Somerset County Council says that information was made available “in a general sense” some months before the changes were implemented. The proposals were discussed in Cabinet and Full Council meetings which were attended by members of the public and Campaign for Better Transport and Passenger Focus representatives (Ev w149). 73 Q 197, Ev w33 74 Q 226, Ev 72, para 1.2; Ev w33, w131 75 Ev w131

27. Local authority representatives denied accusations of a “knee-jerk” response to the funding announcements.76 The Spending Review timetable, they argued, had allowed little time for consultation.77 Consultation was “time-consuming”: “when you are faced with a 28% or 29% cut in your funding, it really does mean you have to work very, very quickly, and without the luxury of having time to restructure how services can be delivered in different ways.”78 Richard Owens of North Yorkshire County Council argued that presenting a multiple consultation options was not useful because of the “very parochial” nature of bus services: “If you give people an option to take off a bus service in Skipton as opposed to a bus service in Scarborough, people in Scarborough will vote to cut the service in Skipton and vice versa”.79 The Dales & Bowland Community Interest Company said it was “rather patronising that [North Yorkshire County Council] does not trust the representative organisations and residents that they consult to consider rationally the difficult choices to be made”.80

28. The Minister accepted that there had been good and bad examples of consultation by local authorities since the Spending Review. But he believed it was inappropriate for central government to specify how local authorities should consult with residents. 81

29. Bus services are often an integral part of the local community. It is only right, therefore, that local people should have the opportunity to voice their opinion if the local authority or integrated transport authority proposes significant changes to bus services that it supports. Some local authorities have faced very significant reductions in their revenue budgets, but it is important that local people are properly consulted when significant changes are proposed to their bus services. Local people should have the opportunity to give their views on the relative importance of different bus services and to suggest innovative approaches.

30. Local authorities should be able to have access to authoritative guidance if and when proposing significant changes to their tendered bus network. The Department should task Passenger Focus to develop a ‘consultation toolkit’ within the next six months for local authorities. This should provide best practice guidance on how local authorities can hold meaningful consultation processes with local communities about bus service proposals. The LGA should disseminate this guidance to local authorities prior to budgetary preparations for the 2012–13 financial year.

31. Bus operators were also criticised for reducing commercial services with little or no consultation.82 There are no statutory requirements on commercial bus operators to carry out consultation when introducing, amending or withdrawing services, although an operator must give 56 days’ notice to the Traffic Commissioner for any changes to a service. Bus operators told us that they engaged with bus users in several ways, for instance

76 Ev 80, para 2.4 77 Q 186, Ev 87, para 8.1 78 Qq 188, 210 79 Q 198 80 Ev w33 81 Q 278 82 For example, Ev 61, para 4.1

through encouraging customer feedback (including via social media),83 consulting local bus user groups,84 and holding “bus surgeries” with Bus Users UK.85 Bus operators did not support centralised specification of consultation processes because of the localised nature of bus services86 and the increase in bureaucracy which would result, although Norfolk Green accepted that non-regulatory best practice directions or guidance could be helpful.87 Not all bus users believed that commercial operators should consult with local people: Mr Richardson-Dawes of Devon noted that bus companies are “not charities [and] no one should be surprised when they take decisions which are commercially sound but not always popular”.88

32. Bus operators must give 56 days’ notice to the Traffic Commissioner for any changes to a commercial service. We urge bus operators to encourage customer feedback about their services and, wherever possible, to consult with users and communities prior to submitting their registration.

83 Q 169, Ev 60, para 2.3 84 Q 168 85 Ev w64, para 5.2 86 Q 169, Ev 60, para 2.6 87 Q 169 88 Ev w130

4 Alternative public transport provision

33. We considered the ways in which local authorities could make alternative transport provision for residents, particularly in areas where the conventional bus network had been, or is likely to be, significantly reduced.

Community transport 34. At least 1,700 community transport organisations operate in England, offering transport services for people unable to access conventional public transport because of location, personal circumstance or a lack of suitable (available) transport provided by commercial operators. Community transport includes a wide range of services, some funded by local authorities, including:

• Flexibly routed, demand-responsive or fixed-route bus services, operating under a section 22 Community Bus permit under the Transport Act 1985. Section 22 permits are issued to bodies that wish to run a local not-for-profit public bus service. In the main, these services exist to serve a community where there is no adequate provision already in place.

• Dial-a-ride minibuses, group transport services and assisted travel services (such as home-to-school, non-emergency patient transport or social care transport), operating under Section 19 of the Transport Act 1985. This allows not-for-profit organisations to charge passengers for providing transport to the people whom the organisation serves, without the need to obtain a public service vehicle operator’s license. It applies to any not-for-profit body associated with educational, religious, social welfare, recreational and other activities of benefit to the community. We were told that several local voluntary organisations, such as Age UK, provided community transport schemes specifically for elderly people.89

• Wheels-to-Work schemes and community car schemes.

Since the Spending Review, some local authorities have confirmed an increase in investment for community transport, whilst others reduced funding.90

35. The Minister has said that “where commercial bus services are not viable, community transport can play a valuable role in preventing isolation”. On 9 March the Department for Transport announced that a £10m fund would be distributed to rural local transport authorities to “kick-start the development of community transport in their area”.91 This was accompanied by guidance to local authorities to help them “get the most out of

89 Ev 55, para 2.2.2 90 Cambridgeshire County Council proposed to set aside £1m of the £2.7m saved over four years through reducing its tendered bus services for spending on community transport, although by July 2011 only £220k had been confirmed for that period. Central Bedfordshire Council has assigned £100,000 to be used to stimulate and support the community transport sector. Hartlepool Council, on the other hand, has ceased funding for all its dial-a-ride schemes. Ev 96, Summary, paras 2.6–2.7 [Passenger Focus] 91 HC Deb, 9 March 2011, cols 69–70WS

community transport”.92 In addition, the Government announced a partnership with the Community Transport Association UK (CTA UK) to provide each of the 76 rural local authorities in England £2,600 for consultancy advice on “how to establish, manage and make sustainable community transport operations within their area”.93 We welcome the Department for Transport’s decision to allocate £10 million to rural local transport authorities to encourage the growth of community transport in their area. This came months after the Department withdrew several ring-fenced transport funds on the basis that local authorities should choose their own priorities. The new fund is a welcome admission of the need for targeted funding.

36. The majority of witnesses considered it unrealistic to expect community transport to fill a large proportion of the gap caused by the withdrawal of tendered bus services.94 It was pointed out that many community transport providers had seen their own budgets reduced following the Spending Review.95 Steve Warburton of the TAS Partnership highlighted a lack of crossover between bus services and community transport services: “I don’t think there is an army of willing community transport people wanting to take on bus services out there”.96 Difficulties in recruiting volunteer drivers were also deemed to constrain significant growth of the sector.97 Community transport schemes were relatively cheap to operate because of their flexibility, but this advantage would be lost if excessive demands were placed on the operators.98 Restructuring of the health and education services in local areas could also affect the sector.99

37. CTA UK believed that section 22 permit community transport services could replace about 10–15% of the gap caused by the withdrawal of tendered bus services. With “expert advice and guidance”, local authorities could utilise community transport organisations “as part of a solution to the problem”. It welcomed the additional Government funding to encourage the growth of community transport.100 CILT, on the other hand, criticised the “ad hoc allocation of resources to the funding of community transport as a substitute for the bus” as being “a retrograde step”, which would encourage the “blanket withdrawal of subsidy for socially [and economically] necessary bus services in favour of community transport solutions, including in areas where this solution is not the most appropriate”.101

38. When questioned on this matter, the Minister argued that it was inappropriate to have a “double-decker bus trundling around country lanes to pick up two people”. It made better commercial sense for local authorities to provide a vehicle “appropriate for a very small group of people”. The Minister accepted that there was a risk that, in some parts of

92 Department for Transport, Community Transport: Guidance for Local Authorities, March 2011, p 4 93 HC Deb, 9 March 2011, cols 69–70WS 94 For example, Q 126, Ev w130 95 Ev w135 96 Q 47 97 Ev w130 98 Ev 85, para 6 99 Q 126 100 Qq 156–57, Ev 77, para 2.2; Ev 166; “New transitional support for rural CT”, Community Transport UK press release, 10 March 2011 101 Ev 85, para 5

the country, local people who relied on bus services may find their local tendered service withdrawn and no adequate community transport available in its place. He had tasked his officials to analyse the impact of local authority decisions on subsidised bus services and the provision of community transport “to find out whether there are any indeed individual areas where people are significantly disadvantaged by decisions taken locally”.102

39. The growth of the community transport sector could mitigate, to a degree, the effects of the loss of subsidised bus services. However, the evidence suggests that community transport schemes are unlikely to replace more than a small fraction of withdrawn local authority-subsidised bus services. Community transport schemes are themselves often reliant on public funding. We welcome the Department’s efforts to collate a national picture of where local decisions have resulted in a lack of both conventional bus and community transport provision. In chapter 3, we recommended that the Department should use this data to identify and, in conjunction with the Local Government Association, disseminate examples of best practice of local authorities who have provided a cost-effective, flexible mix of local transport services, which cater for people who might otherwise be isolated.

40. CTA UK argued that each local authority should have an official who served as a community transport “champion”, whether that was a dedicated post or not.103 The LGA’s view was that many local authorities already had nominated officers with responsibility for community transport; it stressed that a uniform model would not work everywhere due to the inherently local nature of community transport.104 An important role for local authorities is to ensure that the community transport sector is developed in tandem with conventional bus services. Different ways of doing this will work best in different places. The LGA should identify and disseminate examples of best practice.

41. The concessionary fares scheme does not apply to most community transport providers, although some local authorities do permit this at their discretion. Currently only registered services run by community transport operators under a section 22 permit, usually demand-responsive bus services, are eligible for the scheme. CTA UK said that this policy “discriminates against people who can only use community transport schemes”. It calls for the scheme to be extended to cover other community transport operators, particularly dial-a-ride and other section 19 permit services.105 Little Red Bus in Harrogate suggested that concessionary passengers could pay a nominal fare to use community transport services.106

42. If the Government genuinely wants to encourage the growth of the community transport sector, it should legislate to permit the use of the concessionary pass on a wider range of community transport services.

102 Qq 271–72 103 Q 167 104 Ev 143 105 Qq 131, 163; Ev 77, para 5.1 106 Ev w135

43. The scope of our inquiry did not extend to issues concerning the regulation of the bus industry, quality contracts and quality partnerships. However, it is clear that closer partnership working between local authorities, bus operators and community transport operators will be necessary post-Spending Review, in order to better utilise diminished resources. We encourage local authorities and integrated transport authorities to use the provisions within the Local Transport Act as means to achieve better partnership working, where necessary.

‘Area-based integration’ transport 44. Some witnesses argued that local authorities could reduce costs through better co- ordination of the different public transport services they provided (such as social services, non-emergency patient transport, volunteer schemes), for instance through sharing vehicles. The TAS Partnership argued that some local authorities were “very good” at such integrative transport whilst others “operated in little, isolated spheres”.107 CILT agreed that there was “significant room for improvement” in how local authorities co-ordinated transport in this way, although it noted that the NHS had specific requirements in relation to journey times.108 A recent report by pteg recommended better sharing of good practice about cross-sector working, particularly in respect of “the pooling of vehicle fleets and budgets”.109 Devon County Council told us, however, that its own efforts of area-based integration had resulted in “fairly limited” financial savings.110

45. The Minister accepted that local authorities could do more to co-ordinate the transport services they provided. County councils or unitary authorities, he said, were “very well placed” to do this because they were responsible for transport, adult social care and education. He criticised some local authorities who had “three different lots of people doing three different sets of things, with three different lots of buses, some of them sitting empty all day”, although he stressed his conviction that central government’s role was to draw attention to the benefits of such an integrated approach and not to intervene directly.111

46. There is evidence of some potential for local authorities to reduce costs through better co-ordination, planning and delivery of different types of transport services, including public buses, community transport, education, social care and health. The Government should identify ways to overcome the barriers (including regulatory or legislative barriers) to co-ordination, drawing on good practice around the country. The LGA should have a key role in identifying and disseminating best practice.

107 Q 48 108 Q 49 109 pteg, Total Transport: Working across sectors to achieve better outcomes, June 2011, p 20 110 Q 214 111 Q 274

5 Concessionary travel scheme

47. Since the introduction of free concessionary travel in 2006, the number of over-60s who have taken up concessionary fares passes has risen from 56% in 2005 to 76% in 2009. The proportion of people aged 60 and over who said they use a local bus at least once a week increased from 28% to 39% over the same period.112 We heard a great deal of evidence about the value of the concessionary fares scheme. One pass holder said that the majority of pass holders believed that the pass made a “substantial difference to the quality of their lives”.113 The government has on occasions expressed a commitment to measuring the success of its policies through their impact on “well-being” as well as on economic factors. The TAS Partnership conducted work that found the cost of the concessionary fares scheme was lower than the value to the passenger in terms of benefit, so it was “a good thing to have socially”.114 Research conducted in 2010 by Ipsos Mori on behalf of Age UK asked over-65s which services used by older people should be spared in the Spending Review. The concessionary bus pass received more support than the winter fuel payment, care for frail and disabled people and post offices; only the state pension and the NHS were considered more precious.115 Concessionary pass holders told us of the health and social benefits the scheme provided.116 A 63-year old man from Somerset said the free pass enabled him to travel to do voluntary work in Exeter and other locations, the costs of which would otherwise be passed on to voluntary organisations via expenses claims.117 A former bus driver argued that bus operators were wrong to imply that they would be financially better off without the scheme because the vast majority of journeys would not have been made without the pass,118 although we also heard evidence of occasions when fare-paying passengers had been unable to get on a bus because it was full of concessionary pass holders.119

Mr T Reese, Somerset, 63: “I use the free concessionary travel whenever possible, and it enables to me to make bus journeys which otherwise I may not be able to afford.”

Mr T Kirby, Leicestershire: “It is crucial. It makes a difference between the number of journeys I could make and I probably could not make because of personal circumstances in some ways.”

Mr M Simpkin, Sheffield: “For me the bus pass is a huge liberator. “

Mrs H Whitaker, North Yorkshire: “I am 92 years of age, and the free bus pass is a great help and necessity to and from our area, and is much appreciated by our age group. I live

112 Department for Transport, National Travel Survey, tables NTS0619, NTS0621 113 Q 238 114 Q 23 115 Age UK and Ipsos Mori, Live Polling Results: Are We Prepared For An Ageing Society?, October 2010 116 Ev w26, paras 1.6–1.6.1; Ev w111 117 Ev w123, para 6 118 Ev w140 119 Q 239

in a bungalow at the foot of Rombalds Moor, I can manage to walk down but find it impossible to walk uphill, therefore the free bus service (Horse Close) is a boon. “

Mr P Cowlyn, Somerset: “Many local shops (especially tea shops!) say that business has really improved since the passes came in”.

48. Several witnesses, including concessionary pass holders, questioned whether the scheme remained affordable in the current financial context. The TAS Partnership argued that it seemed “perverse to protect concessionary free travel at all costs when the offer of free travel could be irrelevant if there is no service available to significant numbers of potential passengers”.120 Bus Users UK and the Campaign for Better Transport said that many people at their bus surgeries would prefer to pay a discounted fare rather than see their local bus service withdrawn, a point echoed by other witnesses including concessionary pass holders.121 One bus operator has reportedly asked pass holders to voluntarily pay for their bus fare in order to save a local bus route.122 Other bus users said that their free pass had been devalued already due to local bus service withdrawals,123 and some councils had reduced discretionary elements of local concessionary fares schemes.124 Some witnesses, including bus users, believed the scheme needed to be reviewed or curtailed.125 Technological improvements, including the use of smartcards, were highlighted as a means by which usage could be restricted.126

Mrs J Thompson, Hartlepool: “Whilst the government has not amended the concessionary fares scheme, users have in effect been disenfranchised by the withdrawal of services at 7pm and on Sundays”.

Mrs Hare, Elwick Village, Hartlepool: “My husband and I have free passes but they are not much use since the council has withdrawn our local bus service”.

49. Norman Baker MP told us that ministers had considered the concessionary fares scheme “very carefully” during the Spending Review. He confirmed that the Government would not change the entitlement for the free pass for the “foreseeable future”. When questioned further, the Minister said that “theoretically, if you were going to do something at all, you would have a flat fare to be paid either for a journey or a flat fare for the pass each year, because that could be administered relatively cheaply”, although he stressed that this was not the policy. Means-testing, on the other hand, would be “enormously

120 Ev 105, para 1.6 121 Qq 77, 237; Ev 61, para 3.2; Ev w138, w146, w148 122 “Concessionary fares a hot topic as EYMS asks pass holders to pay”, Passenger Transport, 27 May 2011, Issue 007, p 6 123 Ev w135 124 Ev w146 125 Ev w130, w141 126 Ev w80, para 29

expensive”, “negate the benefits of the pass” and costly for local authorities and the Government to administer.127

50. It is obvious that the concessionary fares scheme is highly valued by users and the evidence suggests the scheme provides a number of social, economic and environmental benefits. There is likely to be scope for further cost savings in the management and administration of the scheme, particularly with advancements in smartcard technology, and there may be a case for a one-off payment for the card. We strongly believe, however, that the provision of free bus travel for the elderly and disabled is to be valued. We endorse the Government’s commitment to protecting the entitlement.

51. The concessionary fares scheme has been the subject of more research of late, but it is clear that more robust and detailed data is required about the benefits and usage of the scheme to inform the development of future policy. Recent research by the University of Leeds suggested that fewer than 3% of passholders account for more than a quarter of all concessionary trips, although the study was based on only a five-week period.128 Passenger Focus has conducted research that shows that 39% of older bus pass holders made a greater number of local journeys by bus than before they obtained their passes.129 Age UK said that there was an “opportunity to do more research” to find out exactly about usage of the scheme.130 The ongoing development of smartcard technology was cited as a means to gather further evidence.131 We recommend that the Department of Transport commission further detailed research into the benefits, and usage, of the concessionary fares scheme.

127 Qq 261–62 128 Based on analysis of smartcard data. Ev w80, para 10 129 Passenger Focus, England-wide Concessionary Bus Travel: the Passenger Perspective, July 2009, p 8 130 Q 79. See also Ev w80, para 9 131 Ev 147, para 28; Ev 147, para 28

6 Conclusion

52. Bus services are vital to some people to enable them to participate in employment, education and voluntary work. They are sometimes vital for access to health services and shops, providing the necessities of life. For many they are an important, if not vital, lifeline to social life, cultural experiences, sporting events and other elements of a full life. Our inquiry focussed on the funding of bus services in England outside London in the light of the Comprehensive Spending Review. The Government wills the end of better and cheaper bus services: there is not much evidence that it is willing to provide the means.

53. The Government’s aspirations to improve the passenger experience, for example by having the majority of public transport journeys smartcard-enabled by 2014, are of little consolation to the many bus users around the country who have witnessed, or who may soon witness, their local bus service being withdrawn or fares rising above the rate of inflation.132 Many local authorities, faced with a combination of cuts to their budgets, have reduced funding for subsidised bus services. Bus operators too have reduced commercial services with little notice and no consultation. In some cases whole sections of the bus network have been scaled back, with little or no proper consultation with local communities either by local authorities, integrated transport authorities or commercial operators, and no adequate alternative public transport in place. Given that there may be deeper cuts in 2012–13, there are clearly lessons to be learnt. Both local authorities and integrated transport authorities and commercial operators should consult more widely; and local authorities and integrated transport authorities should use the measures available in the Local Transport Act more imaginatively.

54. The Minister argues that local authorities have ultimate responsibility for their tendered bus network. Local councillors are accountable to their electorate for their actions. With the increased emphasis on devolved decision-making there is, in our view, a pressing need for examples of good and bad practice to be effectively shared between local authorities. We consider the Local Government Association (LGA) to be most appropriate body to take on this role. In this Report we recommend a number of ways in which the LGA should identify and disseminate best practice examples of ways in which local authorities can deliver cost-effective, flexible transport services, including community transport and/or area-based integration transport. We suggest that it should also work with Passenger Focus to provide guidance to local authorities about how to consult meaningfully with residents about proposals to change local bus services.

55. The Government cannot wash its hands of any responsibility for enabling this to happen. The Department for Transport must put its full weight behind helping those directly responsible find solutions to the social and economic impacts of the disappearance of the only public transport that may be available in some places. It is also the DfT who should be monitoring, analysing and drawing conclusions about the effects of changes in bus services, and the wider costs and benefits to the country of policy decisions which affect those services.

132 Qq 280, 285

Conclusions and recommendations

Impact of the Spending Review 1. Local authorities seem destined to make deeper cuts to their tendered bus service budgets in 2012–13 than the current year. We call on the Department for Transport and the Local Government Association (LGA) to implement the recommendations in this Report as a matter of urgency. We recognise that the scale of local authority budgetary reductions in some areas mean that cut-backs are inevitable. It must be demonstrated—not least for the benefit of bus users around the country—that lessons have been learned from the mistakes made during the current round of cuts to bus services. (Paragraph 12)

2. The combination of the reduction in local authorities’ revenue expenditure and changes to the Department for Transport’s concessionary fares reimbursement guidance in 2011–12, with the 20% reduction in Bus Service Operators’ Grant (BSOG) due to be implemented in 2012–13, has created the greatest financial challenge for the English bus industry for a generation. The combined impact of these funding changes will, in some parts of the country, have a disproportionately adverse impact on the provision of local bus services and the level of bus fares. (Paragraph 20)

3. In these circumstances, some local authorities have withdrawn services with inadequate or no consultation. The evidence we have received from bus users around the country demonstrates the anger and concern that people feel about the impact of these decisions on their everyday lives. Some of the most vulnerable people in society, including the elderly, will be most affected by these changes. (Paragraph 21)

4. Local authorities have faced widely varying degrees of budgetary reductions. We recommend that the Department, in conjunction with the Local Government Association, collate information about the decisions taken by local transport authorities as a consequence of these reductions in respect of tendered bus services in 2011–12 across England. The Department should seek information about the provision of alternative transport modes, such as community transport, in areas where local authorities have scaled back tendered services. The Department should identify examples of best practice of local authorities that have responded innovatively to budgetary pressures to provide a cost-effective, flexible mix of local transport services, which provide an acceptable level of public transport for people who might otherwise be isolated. The LGA should play a key role in disseminating these examples of best practice across local authorities. These findings should be made public. (Paragraph 22)

5. The real facts need to be established for the effect of these policy changes to be accurately measured, and for future decisions to be soundly based. The Department for Transport, in conjunction with the LGA, should compile details from local authorities about the impacts of the Spending Review on commercial bus services in

England, outside London, in 2011–12. A similar exercise should be conducted following the implementation of the reduction in BSOG in 2012–13. (Paragraph 24)

6. We appreciate the concerns of the bus industry that the reduction in BSOG next year may, combined with other recent funding changes, affect the viability of some commercial services. We welcome the Department of Transport’s commitment to review the arrangements for BSOG more broadly. As part of its review, the Department should consider whether targeting BSOG in a different way, possibly through greater devolution to the local level, would improve the current approach. (Paragraph 25)

Consultation with local communities 7. Bus services are often an integral part of the local community. It is only right, therefore, that local people should have the opportunity to voice their opinion if the local authority or integrated transport authority proposes significant changes to bus services that it supports. Some local authorities have faced very significant reductions in their revenue budgets, but it is important that local people are properly consulted when significant changes are proposed to their bus services. Local people should have the opportunity to give their views on the relative importance of different bus services and to suggest innovative approaches. (Paragraph 29)

8. Local authorities should be able to have access to authoritative guidance if and when proposing significant changes to their tendered bus network. The Department should task Passenger Focus to develop a ‘consultation toolkit’ within the next six months for local authorities. This should provide best practice guidance on how local authorities can hold meaningful consultation processes with local communities about bus service proposals. The LGA should disseminate this guidance to local authorities prior to budgetary preparations for the 2012–13 financial year. (Paragraph 30)

9. Bus operators must give 56 days’ notice to the Traffic Commissioner for any changes to a commercial service. We urge bus operators to encourage customer feedback about their services and, wherever possible, to consult with users and communities prior to submitting their registration. (Paragraph 32)

Community transport 10. We welcome the Department for Transport’s decision to allocate £10 million to rural local transport authorities to encourage the growth of community transport in their area. This came months after the Department withdrew several ring-fenced transport funds on the basis that local authorities should choose their own priorities. The new fund is a welcome admission of the need for targeted funding. (Paragraph 35)

11. The growth of the community transport sector could mitigate, to a degree, the effects of the loss of subsidised bus services. However, the evidence suggests that community transport schemes are unlikely to replace more than a small fraction of withdrawn local authority-subsidised bus services. Community transport schemes are themselves often reliant on public funding. (Paragraph 39)

12. An important role for local authorities is to ensure that the community transport sector is developed in tandem with conventional bus services. Different ways of doing this will work best in different places. The LGA should identify and disseminate examples of best practice. (Paragraph 40)

13. If the Government genuinely wants to encourage the growth of the community transport sector, it should legislate to permit the use of the concessionary pass on a wider range of community transport services. (Paragraph 42)

14. It is clear that closer partnership working between local authorities, bus operators and community transport operators will be necessary post-Spending Review, in order to better utilise diminished resources. We encourage local authorities and integrated transport authorities to use the provisions within the Local Transport Act as means to achieve better partnership working, where necessary. (Paragraph 43)

‘Area-based integration’ transport 15. There is evidence of some potential for local authorities to reduce costs through better co-ordination, planning and delivery of different types of transport services, including public buses, community transport, education, social care and health. The Government should identify ways to overcome the barriers (including regulatory or legislative barriers) to co-ordination, drawing on good practice around the country. The LGA should have a key role in identifying and disseminating best practice. (Paragraph 46)

Concessionary travel scheme 16. It is obvious that the concessionary fares scheme is highly valued by users and the evidence suggests the scheme provides a number of social, economic and environmental benefits. There is likely to be scope for further cost savings in the management and administration of the scheme, particularly with advancements in smartcard technology, and there may be a case for a one-off payment for the card. We strongly believe, however, that the provision of free bus travel for the elderly and disabled is to be valued. We endorse the Government’s commitment to protecting the entitlement. (Paragraph 50)

17. We recommend that the Department of Transport commission further detailed research into the benefits, and usage, of the concessionary fares scheme. (Paragraph 51)

Annex: the value of bus services

The following quotes are comments given by witnesses about the benefits of local bus services.

Mr R and Mrs J Wilkes, North Yorkshire: “We think buses are seriously undervalued: twice as many people travel on buses every day as travel by train. Many decision makers do not seem to realise this and act as if buses are just for the rump of non-car owners.”

Arriva: “65% of Arriva’s services—and it will be similar to the industry as a whole—are journeys to work, to college or taking people to the high street to shop”.

Mr K Gregory, Somerset: “The importance of local bus services to my wife and I, and many other non car owners, is total. We are in our later seventies and, for medical reasons, I gave up driving some six/seven years ago making buses and trains our/my sole form of transport.”

Association of Colleges: “72% of students travel to College by bus”.

Mrs H Oliver, Somerset: “There are a lot of people, especially those over 60 years, who never learnt to drive, live in villages and rural areas and are therefore reliant on public transport.” pteg: “The bus is relied upon by the poorest groups in society: 52% of households in the lowest real income quintile do not have access to a car. This figure is even higher (64%) for Job Seekers Allowance claimants.”

M Rushmere, North Yorkshire: “The Dales and District service number 70 that runs between Ripon and Northallerton enables my wife and I to get to the shops, attend doctors appointments, visit our banks and building societies, and the post office amongst other facilities.”

Campaign for National Parks: “Local bus services are vital for the economic and social well being of communities living within the National Parks, especially as these contain a higher than average proportion of older people, not all of whom can afford or are physically able to drive a car, but also of young people working in less well paid jobs within the tourist industry who also rely on threatened evening and Sunday services for employment, educational and social opportunities.”

G Oldfield, Norwich: “I am severely disabled and am unable to walk very far—only a few yards. Fortunately I have a Blue badge and a concessionary bus pass for the city Park and Ride. I use the Park and Ride two to three times a week”. pteg: “Buses can reduce congestion, emissions and accidents. The cost to society of car use in congested urban areas has been estimated at above £1/km, which, for a typical 5km urban journey, is ten times higher than the current level of bus subsidy per trip (around 50p in metropolitan areas).”

Kingsdon Parish Council: “The aged in small rural communities are very dependent on

public transport where the village has lost its post office and in many cases has lost the village shop or closure is imminent. To these people this service is a life line.”

Campaign for Better Transport: “Disabled people use buses more often than non-disabled people, and are less likely to have the choice to take a car”.

Mr N Thompson, North Yorkshire: “The weekend services into the Yorkshire Dales are extremely well used by walkers in particular. These buses play an important role in keeping cars off the road, thus reducing pollution.”

O Lambert, Somerset: “Many people of my mother's age (60's) are widowed and are entirely reliant on buses to get from a to b as they have never driven and are now not in a position to learn. [...] My mother derives great pleasure from a change of scenery and the opportunity to go somewhere else for the day. The alternative is being stuck in a village day in day out.”

Formal Minutes

Tuesday 12 July 2011

Members present:

Mrs Louise Ellman, in the Chair

Steve Baker Kwasi Kwarteng Jim Dobbin Mr John Leech Mr Tom Harris Paul Maynard Julie Hilling Iain Stewart

Draft Report (Bus Services after the Spending Review), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 55 read and agreed to.

Annex and Summary agreed to.

Resolved, That the Report be the Eighth Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134.

Written evidence was ordered to be reported to the House for placing in the Library and Parliamentary Archives.

[Adjourned till Tuesday 6 September at 10.00 am

Witnesses

Tuesday 25 January 2011 Page

Nick Richardson, CILT Bus and Coach Forum Committee Member, Chartered Institute of Logistics and Transport in the UK, Steve Warburton, Operations Director, TAS Partnership Ltd, and Professor Peter White, University of Westminster Ev 1

David Sidebottom, Bus Passenger Director, Passenger Focus, Stephen Morris, General Manager, Bus Users UK, Stephen Joseph, Chief Executive, Campaign for Better Transport, and Greg Lewis, Programme Director, Age UK Ev 10

Tuesday 22 March 2011

Robert Montgomery, Service Performance Director, Stagecoach UK Bus, Mike Cooper, Managing Director, Arriva UK Bus, Roger Cotterell, Finance Manager, Compass Travel (Sussex) Ltd, Ben Colson, Managing Director, Go West Travel Ltd (t/a Norfolk Green), and Keith Halstead, Chief Executive, Community Transport Association UK Ev 20

Cllr Peter Box CBE, Local Government Association, Tracey Jessop, Vice Chair, Association of Transport Co-ordinating Officers, David Brown, Director General, South Yorkshire PTE, pteg, Richard Owens, Assistant Director (Integrated Passenger Transport), North Yorkshire County Council, and Bruce Thompson, Transport Co-ordination Service Manager, Devon County Council Ev 31

Tuesday 3 May 2011

Ray Wilkes, Bus user (West Yorkshire), Victoria Harvey, Bus user (Milton Keynes/Leighton Buzzard), Terry Kirby, Bus user (Leicester), and David Redgewell, Bus user (Somerset) Ev 40

Norman Baker MP, Parliamentary Under-Secretary of State, and Anthony Ferguson, Head of Buses and Taxis Division, Department for Transport Ev 46

List of printed written evidence

1 Age UK Ev 55 2 Stagecoach Group plc Ev 57, 60 3 Bus Users UK Ev 61 4 Department for Transport Ev 64 5 Campaign for Better Transport Ev 72, 75 6 Compass Travel (Sussex) Ltd Ev 76 7 Community Transport Association UK Ev 77, 79, 166 8 Chartered Institute of Logistics and Transport in the UK Ev 80, 85, 166 9 Devon County Council Ev 87

10 Passenger Focus Ev 91, 96 11 pteg Ev 101 12 TAS Partnership Ltd Ev 105 13 Arriva UK Bus Ev 132, 168 14 Go West Travel Ltd (t/a Norfolk Green) Ev 135 15 Local Government Association Ev 139, 143 16 Association of Transport Co-ordinating Officers (ATCO) Ev 143, 145 17 Professor Peter White Ev 147 18 Ray Wilkes Ev 152 19 Terry Kirby Ev 156 20 Victoria Harvey Ev 157, 165 21 David Redgewell Ev 165, 169

List of additional written evidence

(published in Volume II on the Committee’s website www.parliament.uk/transcom)

1 D Cooper-Smith Ev w1 2 Civil Service Pensioners' Alliance Ev w1 3 Local Government Technical Advisers Group (TAG) Ev w2 4 Unite - the Union Ev w6 5 Peterborough Pensioners Association Ev w9 6 Society of Motor Manufacturers and Traders (SMMT) Ev w9 7 D Laban Ev w12 8 J Bosley Ev w13 9 RNID, Sense, Radar, Guide Dogs, RNIB and Leonard Cheshire Disability Ev w14 10 Community Transport Ev w16 11 Campaign for National Parks Ev w19 12 NECTAR Ev w20, w21 13 TravelWatch NorthWest (TWNW) Ev w23 14 M Simpkin Ev w26 15 P Spick Ev w28 16 Dales & Bowland Community Interest Company Ev w31, w33 17 Dengie Hundred Bus User Group Ev w38 18 U Benjafield Ev w43 19 Harrogate Friends of the Earth Ev w46 20 Leven Valley Buses Ev w50 21 N & H Rowland Ev w50 22 Confederation of Passenger Transport (UK) Ev w52 23 RMT Ev w54, w106 24 EYMS Group Ltd Ev w59 25 National Pensioners Convention (NPS) Ev w62 26 Go-Ahead Group plc Ev w64 27 Association of Local Bus Company Managers (ALBUM) Ev w68 28 Milton Keynes Bus Users Group Ev w70

29 Firstgroup Ev w72 30 Soar Valley Bus Ltd Ev w75 31 Adapt (North East) Ltd Ev w77 32 Suffolk ACRE (Action with Communities in Rural England) Ev w78 33 Andrew Last of Minnerva Ltd Ev w80 34 Coastal Accessible Transport Service Ltd (CATS) Ev w86 35 Lancashire County Council Ev w88, w89 36 Colchester Bus Users' Support Group Ev w91 37 Shropshire Community Transport Consortium Ev w92 38 M Rushmere Ev w94 39 R Drever Ev w94 40 D Montague Ev w95 41 J Nevell Ev w96 42 S Norton Ev w97 43 Sherborne Transport Action Group Ev w100 44 R J Farron Ev w101 45 Association of Colleges Ev w101 46 T N D Anderson Ev w103 47 TravelWatch SouthWest Ev w108 48 G Oldfield Ev w111 49 R Sumser Ev w111 50 B Daggers Ev w111 51 A Darbyshire Ev w112 52 J Heyburn Ev w112 53 Age Concern North Craven Ev w112 54 E Jones Ev w113 55 L Friend Ev w113 56 Councillor Sue White Ev w114 57 Kingsdon Parish Council Ev w114 58 Mr and Mrs G R Hollaway Ev w114 59 A Robson Ev w114 60 J Willett Ev w115 61 D Hibberd, Town Councillor, Wincanton Ev w115 62 N Browne Ev w116 63 N Thompson Ev w117 64 H Whitaker Ev w117 65 Newton on Ouse Parish Council Ev w117 66 Cllr A Turpin, South Somerset District Council Ev w118, w119 67 A Boyce Ev w119 68 C Walker Ev w120 69 D & M Lilley Ev w120 70 M Jackson Ev w120 71 D Walsh Ev w120 72 M McKenzie Ev w121 73 B J Turner Ev w121

74 E A Turner Ev w121 75 S Hicks Ev w122 76 Brympton Parish Council Ev w122 77 C Sweetland Ev w122 78 Cambridge City and Mencap Ev w123 79 T Reese Ev w123 80 J Robertson Ev w125 81 V Boulton Ev w125 82 O Lambert Ev w126 83 Iain Wright MP Ev w126 84 J Hutchinson Ev w128 85 Carperby-cum-Thoresby Parish Council Ev w128 86 J Richardson-Dawes Ev w130 87 Friends of the Settle Carlisle Line Ev w131 88 Mr and Mrs Banks Ev w133 89 J Robinson Ev w134 90 D Caygill Ev w134 91 P Taylor Ev w134 92 J Thompson Ev w135 93 Harrogate District Community Transport Scheme Limited, (Little Red Bus) Ev w135 94 M E Sim Ev w138 95 F Hare Ev w138 96 G Wainwright Ev w138 97 Mr and Mrs Hale Ev w139 98 H Oliver Ev w139 99 C Olley Ev w139 100 P Cowlyn Ev w140 101 J Weeks Ev w141 102 K Gregory Ev w141 103 J Gordon Ev w142 104 W Wainwright Ev w142 105 G Hutchinson Ev w142 106 A Raw Ev w143 107 I McLaughlin Ev w143 108 J Powers Ev w146 109 Bus Users Shropshire Ev w146 110 P Gibson Ev w148 111 Northampton Group of Bus Users UK Ev w148 112 Somerset County Council Ev w149 113 Save Our 6-7 Buses Campaign Ev w150 114 J Raggett and A Lock Ev w153 115 L Huntington Ev w154 116 K Beacham Ev w154 117 Bridget Phillipson MP Ev w154 118 S Long, the Fairer Fares Campaign Ev w157

List of unprinted evidence

The following written evidence has been reported to the House, but to save printing costs has not been printed and copies have been placed in the House of Commons Library, where they may be inspected by Members. Other copies are in the Parliamentary Archives (www.parliament.uk/archives), and are available to the public for inspection. Requests for inspection should be addressed to The Parliamentary Archives, Houses of Parliament, London SW1A 0PW (tel. 020 7219 3074; email [email protected]). Opening hours are from 9.30 am to 5.00 pm on Mondays to Fridays.

Dales & Bowland Community Interest Company (DBCIC) Henstridge Parish Council J Raggett and A Lock

List of Reports from the Committee during the current Parliament

The Session 2010–12 Eighth Report Bus Services after the Spending Review HC 750 Seventh Report Taxis and private hire vehicles: the road to reform HC 720 Sixth Report The Coastguard, Emergency Towing Vessels and the HC 948 Maritime Incident Response Group Fifth Report Keeping the UK moving: The impact on transport of HC 794 the winter weather in December 2010 Fourth Report The cost of motor insurance HC 591 Third Report Transport and the economy HC 473 Second Report Financial Scrutiny of the Department for Transport HC 683 First Report Drink and drug driving law HC 460 Fourth Special Report Transport and the economy: Government response to HC 962 the Committee’s Third Report of Session 2010–12 Third Special Report The performance of the Department for Transport: HC 549 Government response to the Committee’s Fourth Report of Session 2009–10 Second Special Report Update on the London Underground and the public- HC 467 private (PPP) partnership agreements: Government response to the Committee’s Seventh Report of Session 2009–10 First Special Report The major road network: Government response to HC 421 the Committee’s Eighth Report of Session 2009–10

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Transport Committee: Evidence Ev 1

Oral evidence

Taken before the Transport Committee on Tuesday 25 January 2011

Members present: Louise Ellman (Chair)

Steve Baker Paul Maynard Julie Hilling Gavin Shuker Kwasi Kwarteng Julian Sturdy Mr John Leech ______

Examination of Witnesses

Witnesses: Nick Richardson, CILT Bus and Coach Forum Committee Member, Chartered Institute of Logistics and Transport in the UK, Steve Warburton, Operations Director, TAS Partnership Ltd, and Professor Peter White, University of Westminster, gave evidence.

Q1 Chair: Good morning, gentlemen, and welcome Q4 Mr Leech: Clearly, there is a distinction between to the Transport Select Committee. Could I ask you, London and the rest of the country on that image please, to give your name and the organisation you issue, though. Why is it different in London to the rest represent? This is for our records. We will start at the of the country? Is it simply that some people have no end here, Mr Richardson. choice other than to use the bus in London and, Nick Richardson: Nick Richardson, Chartered therefore, all sorts of people from all sorts of Institute of Logistics and Transport. backgrounds do, or is it something different in Steve Warburton: Steve Warburton from the TAS London? Partnership. Professor White: I have looked at the rapid growth in Professor White: Peter White, Professor of Public the bus market in London in recent years and it is Transport Systems at the University of Westminster, certainly true that the level of bus use is much higher but speaking in a personal capacity. and probably a slightly higher socio-economic group is attracted, although none the less bus users in London tend to be of lower income than users of the Q2 Chair: Thank you. Buses are the most popular underground, for example. Central London is a rather form of public transport in relation to numbers of different case to the rest of London, where clearly you people using them and journeys made, yet buses are have a higher income group using buses, for example, relatively low proﬁle and don’t seem to get the same in connection with rail commuting into the central attention as other modes of transport. Why do you area and then travelling to their ﬁnal destination think that is? Who would like to give me their opinion within zone 1. on that? Steve Warburton: My opinion is that it’s because the Q5 Chair: How does the provision of bus services market is so diverse and it’s also made up of a series here compare with that in comparable countries? of short journeys for low value. Bad service for Steve Warburton: There are some major areas where something that costs £1.40 has a lower priority than the provision of service compares very well. Some of something that costs £264 or whatever the current fare the major operators such as in South Manchester and is that you might be railing at paying for a railway Newcastle provide almost as good a level of service fare. The bus market also tends to be seen, although as is provided in London. there seem to be some changes, as the province of the less well-off, who are not so articulate in complaining Q6 Chair: But what about other countries? and perhaps don’t know who to complain to. Steve Warburton: Than other countries it is better, I think. Q3 Chair: Are there any other views on why this should be? Q7 Chair: Better elsewhere? Nick Richardson: I think the bus industry suffers very Steve Warburton: No. I think London has a very good much from an image problem. You only have to think bus system. of people in their 30s and 40s; their last recollection of a bus was going to school on one. It is the car-only Q8 Chair: Professor White, how would you assess generation and it actually has very little relevance for this? a lot of people, which is a situation that needs to be Professor White: If we compare with other European turned around. countries, the bus system, as such, sometimes does Professor White: The social status of many bus users compare quite well. We have a fairly good level of is lower than that, say, of rail users and they are less service in small towns and rural areas, compared with articulate perhaps in expressing their views and France, for example. A lot of the differences in public interests. transport use, if we put bus and rail together, are in the cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Ev 2 Transport Committee: Evidence

25 January 2011 Nick Richardson, Steve Warburton and Professor Peter White large conurbations, not in London. But if we compare likely to occur where people are travelling into Greater Manchester, the West Midlands and so on congested town centres where there may be limits on with equivalent conurbations elsewhere in Europe, the the amount of parking and environmental constraints public transport trip rate per head is relatively low on the amounts of cars one can accept. In cities like when we put together the bus and rail trips as one Oxford and Brighton, for example, one sees high indicator. levels of bus use, with a combination of some indirect restraint on car use and a positive approach by the Q9 Chair: Are the benefits of bus travel different in operators in marketing their services, improving urban and rural areas? quality. Of course, Park and Ride would be a clear Nick Richardson: Very much so. The level of service example of that. available varies enormously and with urban bus services you get a much more intensive service and Q14 Chair: How important is the marketing? often a much better quality of service. It is more Professor White: It’s difficult to quantify exactly but reliable, for example, and, indeed, more affordable. we do know it is a major factor. For example, even in There is a gradation from urban, through suburban to an area where the population and jobs don’t change, rural, in terms of the offer that is there and the number individuals come and go all the time, so it is necessary of people that are willing to use it. for bus operators to remind people of the product they Professor White: Another difference between urban are offering. Companies like Trent Barton, for and rural is that there are relatively few adult journeys example, do this quite successfully by using liveries to work commuting on buses in rural areas. The peak and the image of the service to increase public is very much dominated by school travel, but, on the awareness of the services that they offer. other hand, they do serve a very important role for journey purposes like shopping, personal business, Q15 Paul Maynard: This is addressed to the TAS medical appointments and so on. Partnership mainly but I would welcome other views. I was struck in particular by paragraphs 12.3 and 12.4 Q10 Chair: Is there any hard evidence that buses of your evidence where you contrasted the decline in support economic recovery? post-war demand and post-war service levels and said Steve Warburton: We did some work for CPT that demand has dropped very sharply but service recently where we were assessing the value of spend levels less so. Clearly, those factors have declined and by bus passengers and the value of the industry for the cost per passenger has increased. What moral or the economy generally. The consensus was that bus lesson, shall we say, do you draw from those figures passengers may spend less per trip but they make in terms of what you expect to see happening in the more shopping trips than people who arrive by car, so future and whether it is predictable and acceptable or their value is probably the same. Our estimate was not? that the value to the economy was over £4 billion. Steve Warburton: I would say, in general, that that trend would level out, because there is some evidence Q11 Chair: Do you have any other views on buses that the drop in demand is levelling out already. The and economic recovery? cost pressures on the industry are the one thing that Professor White: I was involved in an earlier study of really drives the increase in fares now, largely driven a similar form, which likewise confirmed that buses by wages, because they are such a big proportion of represent a substantial amount of shopping activity. It the industry costs. Until you can get a level of cost is perhaps not so immediately evident because one controlling, I don’t think we are going to get away sees the cars parked in the shopping centre but not the from the above inflation fare increase. bus as it moves on. Q16 Paul Maynard: You mentioned specifically that Q12 Chair: Bus usage has been falling over recent Western Greyhound in Cornwall and Konectbus in decades, apart from in London, and there has been a Norfolk have been able to drive up passenger levels. slight increase recently. What do you think is the Can you explain how they were able to do that? What reason for that? Is it to do with the deregulated system steps did they take that improved levels of ridership? outside London or is there some other factor working? Steve Warburton: I think the Chair’s earlier remark Nick Richardson: There was already some decline about marketing has a lot to do with it. In the case before deregulation, which has been exacerbated of Western Greyhound, certainly, they have brought since, I think it’s fair to say. A lot of it derives from themselves up as the good local bus company with an increase in car ownership amongst many people, feelers in all fields. To take another example, Norfolk many groups in society, but also a lot of land use Green in north Norfolk have what should be very decisions. I am sure you can all imagine the business unpromising bus territory but they have made a really parks and shopping centres that are relatively poorly good success of that company. served by bus but have large car parks. Is it any wonder that people opt to use cars in those situations? Q17 Paul Maynard: It is a sort of cultural sense almost of soft power rather than hard— Q13 Chair: Can we encourage more people to leave Steve Warburton: There is a feeling that it is part of their cars and get on the bus? Is that the same market their own service. With regard to their marketing, if or is it a different market? you go to any tourist place in north Norfolk, there will Professor White: That will depend on the destinations be something from Norfolk Green in the rack to which people are travelling. Obviously that is most somewhere. cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Transport Committee: Evidence Ev 3

25 January 2011 Nick Richardson, Steve Warburton and Professor Peter White

Professor White: I also referred to Western definitely the scenario we could be facing in the near Greyhound and Norfolk Green in my memorandum in future. One of the things we concluded is that in its very much the same terms. current form the scheme isn’t sustainable without some additional finance or contribution by the users. Q18 Mr Leech: Has the concessionary bus pass—the free bus pass for pensioners—masked a further Q23 Mr Leech: Have you done any work on the decline in bus patronage by increasing the number of additional cost to the scheme in coming years? free concessionary journeys, and has that been Steve Warburton: We have done some. We have responsible for that slight increase in passenger measured that the cost of the scheme is lower than the numbers in the last two or three years? value to the passengers in terms of benefit, so we Nick Richardson: In many cases that is exactly what contend it is a good thing to have socially. has happened. The concessionary scheme, you could argue, aims to increase accessibility for many people, Q24 Steve Baker: What could the Government do to or is it in reality increasing mobility for the minority reduce bus operators’ costs? who would be using it anyway? They may make more Nick Richardson: One of the big items for a bus trips rather than new entrants making new trips. operator is fuel, and that is always going to be the case. Changes to the amount that the operators pay Q19 Chair: Has any detailed research been done to makes a significant impact, which is often only distinguish those two users? recoverable through the fare box. Professor White: I could comment on that point. Professor White: The other point one might add is I have referred in my memorandum to some work that that most of the costs of running a bus service vary was done in conjunction with one of my students in a with time. You pay your staff by the hour and you case study, where we found that one feature of have annual depreciation of leasing charges for introducing the free concessionary travel was not only vehicles, for example. The most effective way of that the people travelling on half fare now travel more reducing bus operating costs, assuming wage levels often, as one would expect, but quite a lot of people don’t change, is to make them go faster. Even a very in the eligible age group took up a pass for the first modest increase in speed, from, say, 18 to 20 km an time. It seems to have increased awareness of the hour in an urban area, could give quite substantial availability of bus services in a group who may not financial savings to an operator and that could be have used them very much before. achieved, for example, by bus priority measures and also by ticketing systems which speed up boarding Q20 Mr Leech: Given that the bus operators are not time at stops. supposed to make any money—it is supposed to be cost neutral to the bus operators—that therefore means Q25 Steve Baker: You mentioned bus priority that the cost to other passengers who are paying other measures. Is there any research on the commercial fares is significantly increasing as a direct result of the value of that legally privileged access to road space free bus travel. Am I right to make that assumption? that is priority access through bus lanes and so on? Steve Warburton: It can be, but that’s indirect. There What is the value of that privileged access to bus was one case of Rossendale Transport in Lancashire operators? who expressly put in a 10p surcharge on their normal Professor White: There are well-established rules for passengers when Lancashire reduced the rate of evaluating bus priority that have been followed for reimbursement, so there is a correlation. But, many years. We evaluate both the financial gain in generally, in terms of adult passengers, some of the terms of reduced operating costs but also, more larger companies specifically make reference to importantly, the time savings to the bus users in the recording non-concessionary passengers so that they vehicle and any offsetting time losses to other road can report increases on that front as well, and there users. The main element, in fact, is the economic have been some. gains and losses in terms of time savings to users. The operating cost saving is important, but it is a relatively Q21 Mr Leech: I think, politically, all parties agree small part of the economic evaluation of a bus that the free bus pass is generally a good thing, but priority system. from your perspective would you say that it provides value for money? Q26 Steve Baker: The key thing here is to try and Nick Richardson: One of the major difficulties is that assess the indirectly known costs—the costs which the proportion of eligible people will be increasing you can’t measure through the price mechanism. into the future, so if it is regarded as affordable now, Professor White: Yes, but there are well-established that may be very different in a few years’ time. values of time used in economic evaluation of transport schemes, which can be applied in this case. Q22 Mr Leech: Given the level of funding that goes into that scheme, could that money being spent in bus Q27 Kwasi Kwarteng: How likely is it, do you services in a different way be spent better and more think, that people will stop using cars and move on efficiently in creating a better bus service? to buses? Steve Warburton: You could argue that, if there is a Nick Richardson: This is always the crunch issue chance that there is a large reduction in service because the growth in the bus market is dependent on provision but you still have a free pass, it is better not a transfer from car use. You used the word earlier, to have a free pass but have a service, which is Chair, of “encouraging” people away from car use, cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Ev 4 Transport Committee: Evidence

25 January 2011 Nick Richardson, Steve Warburton and Professor Peter White and over the years policies at all levels have very somewhat higher. The problem is that, if local much talked about encouraging a shift to bus. What authorities have constrained budgets and you have a would be helpful is if, instead of encouraging, we mandatory responsibility to fund free concessionary were facilitating that shift to bus. That does mean travel, you may squeeze even further the budget for addressing some of the issues that make people drive. tendered services. So, as Mr. Warburton said, in fact I have mentioned land use decisions, but there is also we’ve had a marked improvement in rural bus service parking availability and pricing. These are levels in recent years, which the National Travel fundamental issues in terms of how people make their Survey confirms. There is a danger of that being travel choices. reversed with some fairly drastic cuts in support for tendered services. Q28 Kwasi Kwarteng: I would like to hear from the Nick Richardson: That has some quite deep rest of the panel on what their view is on that. consequences as well in terms of which sectors of the Professor White: I think there are two factors. One is community are trying to travel and for what purpose. that there is some underlying growth in car ownership. The concessionary scheme at the moment obviously For example, it may be that some of the recent growth targets people who are eligible by age or disability, in concessionary travel by those aged 60 upwards is but there is also very much a need for people of reversed as further people coming into that age group younger age groups, who are perhaps job seeking who have a higher car ownership than traditionally people need that accessibility, and it is quite possible that did in that sector. On the other hand, it is very either they can’t access bus services because they interesting to note in London that car ownership per don’t exist or because they are unaffordable. That has head has increased very little for the last 15 years. lots of implications in terms of where people live and What you can also see in London is quite a substantial work and the structure of some of these rural growth of car clubs; that is to say people are happy to communities. use public transport most of the time but hire a car for the occasional journey for which it would not be Q30 Chair: What is the evidence on the impact on convenient. If we maybe move away from this idea of people seeking work? some intrinsic benefit of car ownership to seeing the Nick Richardson: At the moment I think it is fair to car as more of a utility, people might be more say it is a bit difficult to tell because we haven’t had selective and perhaps willing to hire cars when the fundamental changes that might well be round the required rather than necessarily thinking in terms of, corner. But I know of instances, for example, in South say, having a second car in the household. Dorset, where people in rural communities, younger Steve Warburton: We have seen some development age groups, tend to move towards the larger urban of the principle which park and ride schemes use as centres because that’s where their work is and they well, in that using your car to get to a bus to go into have no means of getting there other than a car, and a city centre has switched, to a degree, to using the if they don’t have a car they inevitably move. bus for the whole journey, which is no bad thing. The number of car owners who make bus journeys is now higher than it was. Q31 Julie Hilling: Mine is a little bit of a chicken and egg question. You talked about some services that are very successful. London is an example of this—I Q29 Julian Sturdy: You touched on concessionary certainly park my car here if I drive down, and then I travel and the impact it’s having on operators through the growth that has been developed through the free don’t use it again until I go home—but you also talked bus pass. Mr Leech has already touched on the fact about South Manchester and a couple of other places. that it has support from all political parties, but, What is it that is fundamental about people using a having regard to what is happening with bus and having a very regular good service and people concessionary travel and the impact it is having, do not using a bus and perhaps having a poor service? you think rural areas are suffering more than urban Steve Warburton: In a way, success breeds success. areas because of the knock-on consequences? We have found that those who have taken the plunge Steve Warburton: There are two ways I think that’s and simplified their services on higher frequencies true. The main way is because of the proportion of the tend to have built on those initial frequencies. What fare that is refunded to the bus operator. A proportion was a mish-mash of hourly buses going different ways of the high fare for a long rural journey means there became a 15-minute doing the same thing, growing to is a bigger gap between a normal fare and the fare a 10-minute doing the same thing. If you look at the that they would actually get as a result of this. I am Manchester-Stockport corridor, it’s every three or four sure Professor White will agree that, compared to the minutes now on the 192, and that’s a London early 1980s, for example, there are many rural areas frequency. that have better bus services than they have had in Nick Richardson: There is also some market years. They are very dependent on public funding, and segmentation, particularly in South Manchester, where if that drains away then the impacts on the rural areas you have the cheap and cheerful bus offering running are bound to be higher, but we must not overlook the against others of generally higher quality. In that impact on the smaller urban places as well because particular instance, it’s one operator operating under they often get overlooked. two brands for different markets, which is a most Professor White: I think it is true to say that the free peculiar situation. In one sense it’s competing against travel probably had a bigger impact on growth in bus itself, but on the other hand it’s also generating a use in rural areas, partly because fares initially were culture of bus use. cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Transport Committee: Evidence Ev 5

25 January 2011 Nick Richardson, Steve Warburton and Professor Peter White

Professor White: As the other witnesses have Steve Warburton: Could I just add to that? If you indicated, there are benefits in concentrating high- were a bus company that has been used to getting 20% quality, high-frequency services on trunk corridors, of your fuel duty rebated but the level of rebate is which also makes it much easier for the passenger to frozen, you end up with very significant fuel price understand the network that is being provided. We increases for bus operators above what motorists also find that, once you run a headway better than experience, because the proportion of fuel that you are about every 10 minutes, people no longer need to paying for has increased by over 50% in about the last consult a timetable; they just turn up and get the next seven or eight years. bus. That, again, makes the service easier to understand and use. Q36 Paul Maynard: Continuing on the issue of fuel and in particular BSOG, there were some interesting Q32 Julie Hilling: What then needs to be done to parts of your evidence where there was a suggestion encourage people to run a more frequent service? that BSOG favoured larger operators over smaller Nick Richardson: A key issue for most of the users operators who had a more fragile economic base. In is reliability. Is it going to turn up when they expect its complexity, BSOG, focusing on things like fuel it to turn up? One of the key causes of unreliability is efficiency, having smart card machines, information traffic congestion. So we come back to the issue of and so on, was almost distorting the market. How can whether you can reallocate road space or put in other BSOG be improved, and are there any ways in which measures that make the bus turn up when it should. It it could be locally assigned, i.e. there will be parts of is this idea of facilitating bus improvements rather the country where some things matter more than than encouraging them. Coupled with that is others perhaps? How could BSOG be made more punctuality, and a key element of that is information. local in what it can incentivise? Are people getting the information about the services Nick Richardson: One of the difficulties with BSOG they need? Do they understand it? Is it in the right in its various forms has always been ease of format and is it available when they are making their administration with what is a very fragmented travel choices? business in many ways. I think it might be quite difficult to have more local inputs there. But, as you Q33 Chair: Are aspects such as reliability more rightly say, changes to encourage people to adopt important than fares? smart card ticketing, for example, incur quite a Nick Richardson: I think it’s fair to say that it considerable expense for an operator and there is a depends. People will pay for the product if it does danger that those with the bulk buying power become what they think it’s going to do because they value it more distant from those who, generally, are as providing the service they need. The thing about relatively small. buses, certainly in my experience, is that it takes a Steve Warburton: It is the recent add-ons to BSOG combination of a whole range of things to make it that have added the complications. The basic principle work. There is no one particular thing. Yes, it is of BSOG that you get a rebate per mile operated was marketing, information and reliability, and a host of a system that was very fair and easy to administer. other things as well. All those in combination produce The one downside was that perhaps it rewarded poor the quality product that generates the growth, and too fuel consumption, because that was taken into often that is thwarted by unreliability. account, but a simple move to a rebate per mile operated would be quite fair, because you would get Q34 Mr Leech: Going back briefly to fuel prices, more miles in a rural area and more rebate. you said that was obviously impacting the industry. Professor White: You should also bear in mind that, My understanding is that a lot of operators bulk buy compared with bidding for a tendered service, the in advance so they get different prices. They may get BSOG claim procedure may be relatively simple for it at a good level or they may get it at a bad level, a small operator. One effect of BSOG, by lowering depending on when they bought it. But where is the costs, is to make some services commercially viable balance between that and the cost to motorists, that would otherwise go through the tendering persuading motorists out of their cars and on to the process. buses? Professor White: If motorists look directly at petrol Q37 Steve Baker: I am just thinking about road costs as their main perceived cost of travel, that can charging, which I know the Government has ruled out. be quite significant in modal choice, whereas it is a To be absolutely clear, we know it has ruled out road comparatively smaller share of the bus fare, around charging. We have talked about fuel and the cost of 10%. So an increase in fuel prices should relatively fuel to bus operators, and it is obvious it would be a assist buses if it achieves the modal transfer from car, major cost. If one were to have substantially lower even if bus operating costs as such are increased. fuel taxes but introduced road pricing, how do you think that would impact on bus operators? If I may, I Q35 Mr Leech: Would you argue then that higher will give you a steer while you think about it. It just fuel prices are good for the bus industry as opposed strikes me that a full bus is highly likely to outbid a to bad for the bus industry? single occupancy car for scarce road space during rush Professor White: That depends on the cross-elasticity hour. It seems to me that perhaps road pricing is good of demand with respect to car fuel price, but yes, that for bus operators or potentially good for bus operators. could be a significant effect. Is that something the industry has considered? cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Ev 6 Transport Committee: Evidence

25 January 2011 Nick Richardson, Steve Warburton and Professor Peter White

Steve Warburton: I would totally agree. One of the Q41 Chair: Can increased bus fares compensate for main things that sways the balance of car versus bus a lack of income or a reduction of income? is cost. If you add that significant cost to the car Nick Richardson: In many cases they can, but to the journey, the balance is tipped a little. The same detriment of attracting new users, and indeed putting principle could apply to city centre parking. If there off some current users. There is no standard fare is a high premium on city centre parking, such as there across the country, and some places are just is in somewhere like Nottingham, and with the prohibitively expensive. workplace parking levy coming in there, that is likely Professor White: As I mentioned in my evidence, the to have the same balancing effect. typical price elasticity is minus 0.4, which means that Professor White: If revenue from fuel tax effectively an operator normally will get a net gain in revenue if were replaced by income from road user charging, that they increase prices, albeit at the loss of some would make the charging system far more selective, ridership. with higher charges where congestion occurs. That would clearly be to the benefit of buses in congested Q42 Chair: Should entitlement to concessionary urban areas. On the other hand, in rural areas, of travel be extended to community transport? course, buses might be in a less favourable position Professor White: Yes, it would be logical if one as the direct perceived costs of running cars would be argues that the purpose is to benefit the types of user lower if some of the fuel tax revenue from cars had who require such services. been replaced by income from road user charging. Steve Warburton: Many local authorities do extend the scheme to cover community transport schemes, Q38 Chair: This is not an inquiry into road pricing, I but it’s not part of the mandatory scheme. emphasise, but quick comments may be helpful to us. Nick Richardson: I would certainly concur with the Q43 Paul Maynard: On that point, clearly there is a views expressed so far. It may well be in the dim and national set of guidelines for the concessionary fares distant future. scheme. Some councils choose to go over and above what is mandated nationally, either by extending it to Q39 Chair: What is the overall impact of the community transport or adjusting the hours. How can spending review going to be in relation to transport? the national scheme be improved to make it more Is it going to have a drastic effect on services, and locally responsive? I am thinking of my own constituency, Blackpool, where we have high numbers who is going to suffer the most? Is it possible to make of tourists coming in who aren’t local and there are predictions at this stage? always concerns that we are not getting the proper Nick Richardson: It is difficult to make predictions, rebate that we should for the amount of mileage. Is quite clearly. But, yes, if you have less money to there any way that the concessionary scheme can be distribute, particularly for what are basically more tweaked so that it is more locally responsive and then marginal services, it is quite possible that many of councils can make better decisions, as it were, over those will disappear, because there is no alternative how they spend that money, or does it need to be funding stream for them. That is a real danger, nationally mandated or else it will just fritter away? because it undermines not only those services at the Professor White: One thing that would help is more margin but commercial services also. You can imagine comprehensive use of smart card technology, because a situation, for example, where you want to use the at the moment we have a national entitlement within bus to go to work and come back in the evening after England but relatively poor data in some cases on the six o’clock, but there is no bus after six, and the net use by non-residents in places such as Blackpool, even result of that is you don’t use the bus at all. There though many of the passes have been issued as smart could be some quite severe ramifications. cards. If that technology comes into wider use, we should at least improve the statistics to establish how Q40 Chair: Is that view generally shared? The many trips have been made by residents local to the Department for Transport says that a reduction in area and how many by visitors. But if you then BSOG will result in an overall 1% change in fare attempt to introduce a lot more local variation, that levels and services and a 2% change in rural areas. would be very difficult for operators who already have It’s not just BSOG, is it? It is a combined effect. problems where they cross boundaries of different Steve Warburton: The BSOG thing is fair enough. If authorities. One or two may give the concession in the it was only the change in BSOG, the world could morning peak and the other does not. So there are probably live with it by means of some adjustment to some operational feasibility issues as to the degree of service and some increase in fare. I would not query complexity you could have. the 1% to 2% for that. The really dangerous one is the change in the way concessionary fares are paid for, Q44 Paul Maynard: On both concessionary fares which is going to lead to some significant reductions and BSOG, you appear to be arguing that the virtues in payments to operators. The thing about the lie in simplicity and that that is a price we therefore concessionary fare payments is that they are across the have to pay for the local kinks in the system, as it board, it’s the commercial network, tendered network, were. Would that be a fair assessment? everything. We are working for one large shire county Nick Richardson: That is generally the case, yes. in East Anglia which is reducing its payment level by 33%, and that’s not a level of reduction of payment Q45 Chair: You are all nodding. Does that mean yes, that operators can tolerate. because we can’t write nods down? cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Transport Committee: Evidence Ev 7

25 January 2011 Nick Richardson, Steve Warburton and Professor Peter White

Witnesses: Yes. if we are going to see the impacts you have suggested in terms of levels of bus services in the future, we Q46 Paul Maynard: Finally, where we have a need a more radical reappraisal of what transport is socially necessary route—define that how you want— being provided at a local level out of the public purse? which is uneconomic, what in your view is the best Steve Warburton: I would fully agree. One of my way to try to sustain that route? Who should be paying colleagues specialises in doing precisely this— and how? working with local authorities to pull together all the Professor White: Under the present system it comes different strands of social services transport, out of the budget of the local authority, and it probably non-emergency patient transport by the ambulance would be sensible to continue making that decision at service, volunteer-run things, the whole gamut. Some a local level. One underlying problem, which also of the local authorities are very good at doing them arises in the case of transport investment, is a very and others all operate in little, isolated spheres. high dependence of local government on central government grants. We don’t have, for example, some Q49 Paul Maynard: Would you say there is an awful of the local sources of tax revenue one sees in other lot of duplication going on? European countries, like the Versement Transport in Steve Warburton: There can be. France, which enable local financial objectives to be Nick Richardson: There is a certain amount of an set and money to be raised to provide, for example, a awful lot of people all running services for their own better public transport system. requirements. One of the remits of local authorities is to try and co-ordinate transport at that sort of level, Q47 Julian Sturdy: Just going back to community and, as Mr Warburton says, with quite a lot of success transport, what do you see as the role of community and savings. But you also have to remember that, for transport and its role in delivering greater accessibility example, those services provided by the NHS have to areas where the bus services are quite poor at the specific requirements in terms of the times of journeys moment? Then, following on from that, do you think and so on and so forth. It is very circumstantial, but that existing operators see community transport as a yes, I think there is significant room for improvement. threat to them going forward as well? Nick Richardson: On your last point, no, I don’t think Q50 Julie Hilling: I want to push more on what they do see it as a threat. They see it as a needs to be done because buses are a public service complementary service. But it’s worth remembering as well as being public transport. Hopefully, all of us with community transport that they too require quite will reach a point in our lives where we need to use a substantial subsidy. In most situations that’s always buses, and certainly at the start of our lives we need going to be the case. They provide a very valuable to use buses. There is an issue about interconnectivity service. Various schemes have attempted to attract a and you have said before that some bus companies very broad audience rather than just elderly or have been more successful. What is it that the disabled people, with mixed results, I think it is fair Government, local authorities and operators should be to say. It is a different type of service but a very doing to ensure that we are not going to lose services valuable one none the less. during this period of time now and that we have better Professor White: You need to distinguish between bus services rather than worse ones? community transport in the sense of services provided Chair: What can the various participants do to make by volunteers, where you are dependent on a pool of things better? local volunteers which may need to be replenished Professor White: An element of stability in funding, continuously over time to sustain that service, and particularly for changing services in rural areas, is other services which may involve use of paid staff, important. Another, which the Local Transport Act such as demand responsive minibus services which 2008 has helped with, is removing some of the can incur rather high costs per trip, albeit providing barriers which competition policy has created to very useful benefits to the local community. sensible co-operation between operators. Particularly Steve Warburton: I think community transport and in the early phase of deregulation, it was quite difficult bus services are very much different beasts, and there to have joint ticketing and timetabling. That has now isn’t a lot of crossover between the organisations that eased, but there is scope for encouraging more do one or the other. There are a handful, probably, in inter-operator co-operation in some cases so that we the entire country who dabble in proper bus can promote a single network more effectively to the operations, if you could call it that. I don’t think there user. You can now see this occurring in some respects is an army of willing community transport people in Oxford under the quality partnership there, for wanting to take on bus services out there. example.

Q48 Paul Maynard: Looking forward, given what Q51 Chair: Are quality partnerships important in you have just said, do you think it would be helpful improving the situation? to try to redeﬁne bus provision and incorporate all Nick Richardson: Very much so. Partnership works. other forms of publicly funded transport by local It is a complex business, but what you need is councils, i.e. not just community transport but post commitment from all parties and that is local buses perhaps or the work done by hospitals authorities acting as the highway authority and, transporting people around the local area? There is clearly, operators and other players as well. The way clearly an awful lot of publicly funded transport going to take partnership forward is to have a co-ordinated on, moving people around an area. Do you think that, programme of improvements because everyone has cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Ev 8 Transport Committee: Evidence

25 January 2011 Nick Richardson, Steve Warburton and Professor Peter White the same objective. They want more people on the Apart from the actual fares charged, you have buses and they want better services. They have a incompatible systems, and that is gradually working common goal, but negotiating all the hurdles to through to a more positive outcome. There is joint achieve that is quite an intricate process. information and that sort of thing. Some of them are easier than others but they all need to happen. Q52 Chair: Mr Warburton, do you have any thoughts about that? Q58 Julie Hilling: Therefore, what is the barrier then Steve Warburton: Probably, if you asked a lot of bus to quality contracts and to having that as competition? operators, they would like to be left alone more. We We have a device now to say, “Okay, you can have have had innumerable OFT investigations in the quality contracts”. Why are we not doing them? industry, the OFT investigation into the whole Nick Richardson: Operators tend to think in the very industry and now the Competition Commission short term and recent events have bumped them into investigation into the whole industry. a longer-term view. They realise that, as you say, they are not competing against each other; they are Q53 Chair: Ms Hilling’s question isn’t, “What would competing against car users by and large. That is the any individual party in provision of transport like?” It share of the market that they need to tap into. But is what should be done to make the best of reduced with that realisation comes a whole host of practical funding, in the interests of the public. difﬁculties, partly to do with the regulation and Steve Warburton: Partly, that goes along the same competition issues. Co-operation doesn’t come easy to avenue that there is this sort of sword hanging over some of them and there is very much a role there for bus operators about doing things which would beneﬁt local authorities to try and guide them through the the passengers but would be seen as anti-competitive. process. Everyone is in the same boat, as I say. They We have worked with local authorities that want to do all have the same objective, but it often takes many that as well, but they have run scared of the years to work through the system and that ought to be competition authorities. accelerated and encouraged.

Q54 Chair: Yes, but what should be done? We are Q59 Kwasi Kwarteng: On the issue of cars and not asking you how each individual participant sees buses, do you think there is any way in which the things. The question is: what can be done by the bus companies can aggressively market themselves in various parties providing public transport to make the order to attract car users? My colleague asked you best use of reduced resources? about co-ordination, and you said that you felt the bus Steve Warburton: I think partnership working is very companies should be more co-ordinated in terms of important. There are some very successful ones planning routes. At what level do you think this which, above the ones that are usually quoted which planning should take place? Is that a Government are the Brightons and Oxfords of this world, have thing or a local government thing, or is it something done some useful things. that they should be planning within themselves? Nick Richardson: On your latter point, yes, it is very Q55 Chair: So partnership working? much a local authority scale of planning, although Steve Warburton: Yes. having said that, of course, you often end up involving more than one local authority, particularly with buses Q56 Julie Hilling: When you talk about the sword of that go from smaller towns to a larger urban area, for Damocles, what do you mean? example. Hence, you end up with a dose of politics in Steve Warburton: Because the penalties for infringing there which can be very difﬁcult. competition law can be so severe, it acts as a stiﬂing aspect on a lot of things, such as sharing frequencies Q60 Chair: What does that mean? or perhaps acquiring a smaller operator that may not Nick Richardson: For example, in the West Midlands be worthwhile in the end because you have this you have one authority that has been busy taking out investigation that costs a fortune and you may have to bus lanes while others have been putting them in. divest and that sort of thing. Professor White: It may inhibit some aspects of smart Q61 Chair: You mean different decisions are made card ticketing technology, not the period travel card by different authorities? but pay as you go systems, equivalent to the Oyster Nick Richardson: Yes. Pay as You Go in London, where you need some Chair: That is a clearer way of expressing what you harmonisation perhaps of fare structures between meant. operators in the same area for a card to be easily Nick Richardson: Yes, and a different political inter-available. Sometimes competition policy makes complexion with a different view towards how you that rather complicated for the operators to do. operate buses.

Q57 Julie Hilling: You are saying that operators Q62 Chair: And independent integrated transport should not be competing. They should be working authorities? together to plan a bus service across an area. Nick Richardson: They tend to be more successful Nick Richardson: Indeed. That is very much the case. in trying to co-ordinate things. Again, there are no In the context in which operators work there are an guarantees and, of course, they only apply in six areas. awful lot of challenges and they need to pool There are plenty of large conurbations where that resources to achieve improvements. Ticketing is one. framework simply isn’t in place. cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Transport Committee: Evidence Ev 9

25 January 2011 Nick Richardson, Steve Warburton and Professor Peter White

Coming back to your first question, on what we can through doing that and there is a balance to be struck, do to facilitate a shift from car use, marketing works. quite clearly. The lessons of history over the past 20 It tends to be relatively short-term in impact, though, or 30 years have suggested that maybe we are not and you have to keep renewing it and coming up with quite heading in the right direction. new ideas. But there may well be other opportunities for operators, for example, running their own park and Q67 Steve Baker: If they won’t make the right ride site rather than a local authority and that sort of choices, just force them. thing. It is teasing out what car users want out of a Nick Richardson: No. One of the things about bus operation. I think, historically, many bus operators transport is that you can’t force anyone to do anything. simply haven’t asked the question. What you want to do, basically, is to facilitate the means through which they can make rational choices. Q63 Kwasi Kwarteng: Can I ask a follow-up? It If people are volunteering to do it, they will be an seems to me from your answers that you envisage a awful lot happier. big role for local authorities in this area, and I just Chair: Are there any different views to that? No. Mr want you to expand a bit more on that. What do you Maynard? see as the function of the local authority? Nick Richardson: A lot of it boils down to local Q68 Paul Maynard: Part of our inquiry is looking at authorities in the fact that they are the highway the adequacy or otherwise of the consultation authority. We have spoken about bus priority processes. Do you think local areas are consulting measures; they are the people who implement them. adequately or not with a view to the current set of You have to work hand-in-hand with them to promote changes that is going on? that. They take that overall view on co-ordination so Steve Warburton: I think there are as many areas of that they can stand back and see the slightly bigger consulting or not as you could possibly come up with. picture and also act as a useful role for consultation, because channelling the views of the users and the Q69 Chair: But what is actually happening? various other sectors of the communities and enabling Steve Warburton: We are aware of examples of local change is important. authorities just deciding at committee level that services are not going to be supported in the evening Q64 Steve Baker: Following up from an earlier or Sundays, without any public consultation. We have remark, heaven forbid that politicians should be others that consult the public on what the options are considered unhelpful in any way to transport policy. for certain patterns of service or replacing them. The But, given the experience of the last 100 years, the same equally applies to operators. Some are very good remarks you made earlier about the sword of at consulting their passengers if they want to change Damocles and the levels of intervention in bus something and some just go ahead and do it. operation today, what reasons are there to believe that it’s possible to come up with a rational transport plan Q70 Chair: So it is a mixed bag? at any level? Steve Warburton: Very much so. Nick Richardson: We all share an impending problem. We all know about traffic congestion, yet we Q71 Paul Maynard: Is Passenger Focus playing the blame it on everyone else. We all know about air role that you might like them to play or do you think quality issues; we all know about peak oil. What are they are the people to play it in managing this period we going to do there? There are some very significant of change? things just around the corner, and one way of Chair: Does anybody have any views on Passenger addressing that and a whole host of social and Focus’s role? environmental issues is promoting public transport in Professor White: Yes. I think they play a useful role, a positive and forthright way. particularly in identifying the relative priorities which bus users attach to differing aspects of service quality, Q65 Chair: Are there any other views on rational reliability, price and so on. It is also worth bearing in transport policy? mind in terms of consultation that the other effective Professor White: The Local Transport Plan thing to do when you change a bus network is to framework also provides the means by which local monitor the changes in the levels of demand and usage authorities can address these issues in a which follow. After all, one feature of bus networks comprehensive way, including bus priorities, parking is that they are relatively flexible. It is not like policy, highway construction and so on. consulting on some piece of infrastructure that is going to be unchanged for 50 or 60 years. As you Q66 Steve Baker: If I may, I think the imperative is change networks, by monitoring the impact of that absolutely clear. I think the question is: should we, change on users, you can then be responsive where based on our experience and current circumstances, problems arise, for example. increase the levels of intervention in bus operation and transport generally, or should we have a much more Q72 Chair: Does Passenger Focus have sufficient open and dynamic system for enabling people to make powers to be a bus watchdog for the public? rational choices about how they travel? Professor White: It certainly provides a welcome Nick Richardson: Certainly my view is that there balance to the previous emphasis, which was very ought to be more intervention. Of course, the strongly on the interests of rail users, who in any case difficulty is that you upset an awful lot of people are more vocal and articulate. But, also, at the local cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Ev 10 Transport Committee: Evidence

25 January 2011 Nick Richardson, Steve Warburton and Professor Peter White level you do need bus users to stand up for themselves Nick Richardson: I think that would be the case. One a little more perhaps. of the difﬁculties with consultations of the sort you mentioned is that it is very difﬁcult to change the Q73 Paul Maynard: In Blackpool, we have had outcomes. It is all about taking things away and regular focus on whether individual routes should be reshaping, rather than looking at the bigger picture. retained or not in periodic consultations. Do you not One of the features often in transport consultation is think it would be better at a particular time of change that it is an information exercise rather than an if we have wider consultations that focus on the engagement exercise, which is generally far more networks that people want to see rather than this effective. gradual erosion of services and an argument every few Chair: Thank you, gentlemen, for coming and months over, “Why has this number bus answering our questions. disappeared?” Would that not be a more sensible approach at this stage?

Examination of Witnesses

Witnesses: David Sidebottom, Bus Passenger Director, Passenger Focus, Stephen Morris, General Manager, Bus Users UK, Stephen Joseph, Chief Executive, Campaign for Better Transport, and Greg Lewis, Programme Director, Age UK, gave evidence.

Q74 Chair: Good morning, gentlemen, and welcome of campaigning and so on going on around the to the Transport Select Committee. Could you give maintenance of bus services in some areas. your name and the organisation you represent, please, Stephen Morris: There is a substantial sector of for our records? I will start at the end here. society that don’t have access to cars for reasons of Stephen Morris: I am Stephen Morris from Bus age, disability, etcetera. For those people, the bus Users UK. service is just as vital as any other public service. If Stephen Joseph: Stephen Joseph, Chief Executive, you live in a particular place you expect to have a Campaign for Better Transport. postal delivery, mains electricity, gas, water, etcetera, David Sidebottom: David Sidebottom, Passenger and the bus service is just as vital as those services to Focus. enable you to access all sorts of opportunities, such Greg Lewis: Greg Lewis, Age UK. as retail, work and education opportunities. The big difference, of course, is that the bus service does tend Q75 Chair: Thank you very much. Where would you to be expendable and can be removed almost without say that passengers and the public rank bus services any notice, unlike other similar services. in relation to other public services? Are they seen as something important? Would anyone like to Q76 Chair: The spending review is likely to have a comment? signiﬁcant impact on bus services. Is there any David Sidebottom: I think so. We undertook some particular aspect of the spending review that you think research ourselves in terms of passenger satisfaction, will be more harmful than others and who is going to be most affected by the likely cuts? and levels of passenger satisfaction with bus services Stephen Joseph: Shall I start on that? In common are extremely high and I think pleasantly surprising with some of the comments made by the previous compared to some of the previous ones we had done witnesses in the previous session, it is no one cut that on rail. Also, there has been some research undertaken is causing the problem. It is the combination of cuts. for rural communities and it is placing passenger So we have seen a focus and the Committee rightly transport as a very high priority, particularly amongst focuses on the Bus Service Operators Grant. But we rural communities. 28% of respondents felt that, in are also seeing general cuts in revenue support for terms of things improving, public transport was one local authorities which are feeding through to tendered of the key priorities for improvement at a rural level. bus services and, also, the impact of concessionary Greg Lewis: The survey that Passenger Focus fares changes. There is the change of going to undertook also revealed that 39% of older bus pass transport authorities rather than district councils and holders made a greater number of local journeys by the way that’s changing. Also, there is the formula bus than before they obtained their passes. It was a being used to reimburse local authorities and, in turn, very useful piece of research from our perspective as the guidance on reimbursing bus operators. All of well and reiterated the fact that free local bus travel is those are having an impact on bus operations and the a lifeline for many older people and is very highly combination is leading to some signiﬁcant reductions valued by them. in various areas. Stephen Joseph: In the local consultations that some David Sidebottom: It is also worth saying that the local authorities have been doing about the kinds of immediate threat, I think, is the 28% reduction in local cuts people want to make and what choices they want authority grants and mentioning the work we are to make, buses have come out as one of the top things doing to write to all local authorities across the people want to protect. There is some good evidence country to gather the information about what is emerging that that is one of the things that people are happening in terms of cuts and how that is going to really worried about and we are starting to see a lot affect services being put in doubt, reduced or cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Transport Committee: Evidence Ev 11

25 January 2011 David Sidebottom, Stephen Morris, Stephen Joseph and Greg Lewis removed. But, also, we are finding in recent times as issue now of those very marginally profitable routes well that authorities are looking at saving some money that may exist on the edge of town or rural services, on the provision of information, particularly at bus if run commercially, which may be tipped into being stops and where there are larger bus stations, the sort unviable and there may not be the local authority of ticket office facility. That, again, goes against the spending there to pick up those tendered services. So, flow of trying to encourage people who don’t use if money was to be redirected in, it would be better buses to find the kind of easily accessible information for a passenger to have a service than have a bus pass. to make an informed choice about, “I will catch this The challenge here is that many passengers in the bus to this destination at this time.” That is the kind immediate term will have a bus pass but no service, of consequence of a longer-term decision. so maybe some funding allocation might be something Greg Lewis: I would agree with that and say it is a to look at. combination of various cuts in the grants that affect Stephen Morris: Certainly, quite a lot of the people bus provision. Our particular concern is the we talked to at our bus users surgeries suggest that disproportionate effect that we anticipate it will have they would be quite happy to pay a flat fare to travel on bus travel for older people in rural areas, not least on the bus, say, 50p, to ensure that they still have a because of the fact that a large percentage of bus service, rather than to see the bus service pensioner households in rural areas don’t tend to have disappear because of the cost of the concessionary access to a car and therefore there is the impact that fares system. it will have on them. We would very much like to see a rural premium being taken into account when the Q78 Chair: How extensive is your research on that? provision of bus services in rural areas is considered. Stephen Morris: We do about 20 surgeries a year in England in different locations around the country. Q77 Mr Leech: I think you were all sitting in the They are typically attended by about 150 people. Out audience when we had our previous panel and I of those, we probably get that comment 10 or 15 times accepted that all political parties were in support of at each surgery. It is not hugely comprehensive, but the free bus passes for pensioners and disabled people. we do meet ordinary people in the street rather than But I asked a question, and I didn’t really get an people who have specifically come out to go to a answer, as to whether that £1 billion could be spent meeting. better than on a free bus pass. Do any of the panel think that there is a way in which that £1 billion could Q79 Chair: Mr Lewis, in your evidence, though, you be spent better to improve bus services without losing talk about the value that people attach to the free pass. the sort of services from which a lot of elderly and From some of the evidence, and certainly many of disabled people have clearly benefited? the comments submitted, it seems that funding free Chair: Mr Lewis, do you have any thoughts on this? concessionary fares is emerging as a problem rather Greg Lewis: I think it is a very difficult question. I than something beneficial. Is that something that think the problem with the current system is its would be a concern to you? complexity. The funding arrangements are extremely Greg Lewis: It would be a concern to us if there was complex; I struggle myself to understand them. The any move to alter the universal nature of the bus way bus companies are compensated currently by the concession. We have always opposed the idea of the Act provides a service whereby they shouldn’t make concession, for example, being means-tested. Because any money out of the scheme, which obviously would of the amount of people we think potentially would be correct. The concern for us, I suppose, is that, if be taken out of the system as a result of that, and the bus companies feel they are not being remunerated in administrative cost of means testing, we don’t think it a way that makes providing those services cost- is a viable option. You won’t be surprised to hear me effective for them, they will simply withdraw them. say that. We think that the bus concession has been a Therefore, a balance has to be struck between great success. We think it is very, very popular with ensuring that bus operators can make a profit and run older people. these services and provision of these services, I would agree that there is an opportunity here to do particularly, as I said, in rural areas, but also in some more research, and Age UK is about to try and embark of the smaller urban areas where these services are on some research to find out exactly how much use is relied on particularly by older and disabled people. So made of the bus pass by individual older people and I do think it is a balancing act. I think it is very disabled people, because I think there is some difficult to encapsulate simply where those suggestion that it is a small number of older people administrative changes should be made, although we making a large number of trips. I think that support the Government’s aims in trying to simplify information would be very helpful. the administrative arrangements as they currently stand. Q80 Mr Leech: Is there much evidence that the free David Sidebottom: The work we did talking to pass has given access to people who were not concessionary fare passengers was published in 2009. accessing bus services before, though? Clearly, it was a very popular scheme and people have Greg Lewis: There is evidence that there has been a made an informed choice by leaving their car behind. high take-up of the bus pass. That may not necessarily There is some evidence in modal shift, so there is be the same thing and it comes back to getting the some benefit in the scheme. If additional money was data. Some of the discussion prior to this session was to be put back into the bus industry, whether it came on the use of the smart cards, and, undoubtedly, where from concessionary fares or elsewhere, there is the smart cards have been introduced, the data that has cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Ev 12 Transport Committee: Evidence

25 January 2011 David Sidebottom, Stephen Morris, Stephen Joseph and Greg Lewis been obtained from that and the use of the bus pass one hand, a lot of these decisions are being left to amongst older people has been very useful. So we are local authorities and ring-fencing has been removed. looking at that quite closely now because, clearly, we On the other hand, it is quite clear that some of the want to be able to demonstrate value for money of the bus cuts that are being considered will have big bus pass and we clearly think the social benefits and impacts on other Government Departments and other the services that it provides to older people and access major Government objectives. For example, the for them to local services is absolutely vital. I think Secretary of State for Work and Pensions made some it’s early days. I would not want to be in a position to comments to people in Merthyr in south Wales about suggest that the bus concessions should be changed people getting on buses to Cardiff to find access to now or the universal nature of them should be jobs. changed until that research has been done and we can It is quite clear from the work we have done, and get the data to examine more closely how these bus particularly some work we did with Citizens Advice, passes are being used. that in many cases people are not able to get off welfare and into work because of transport problems Q81 Mr Leech: Can I just come back to Mr Joseph, of various sorts. Either the fares are too high or the because he did not get an opportunity to offer an services don’t exist, or you can get a service there but alternative way of spending £1 billion? not back and so on. There is a problem that the mix Stephen Joseph: The only point I was going to make of funding and the differences between national and is that, in theory, of course, you could put £1 billion local objectives have not been clearly spelt out, and into the bus industry and possibly get better returns in that makes it much more difficult to prioritise buses. terms of numbers of services available in the way that It has always been seen, as a former Prime Minister David talked about. In practice, what I have noticed said, that people getting on buses are, in general, is that money removed from transport tends to go “losers”—I don’t think that’s quite the word she elsewhere, so I am not sure this is a real choice. If £1 used—whereas trains are used more generally. It’s billion was going to go, in ring-fenced terms, into worth saying, in continuation of some of the previous local authorities for bus services, I guess it might be conversation, that London is an exception. The able, in many cases, to be better used if you had the percentage of people who don’t use buses in London kind of flat fare arrangement that Mr Morris was is somewhere of the order of 20%, and that’s very talking about, charging people and so on. In practice, different from elsewhere. what we have noticed—and some of the cuts that we have seen coming forward from local authorities Q83 Mr Leech: Haven’t you made an argument there suggest this—is that transport, and bus services in for means testing of free concessions, and possibly to particular, tend to be in the firing line when cuts are include jobseekers? considered. Stephen Joseph: First, there is a general question with means testing of whether you end up absorbing all the Q82 Mr Leech: That leads on to my last question. savings you might make in the costs of the testing. Out of the comprehensive spending review, railways That is a general problem. It is worth saying, by the did, relatively speaking, quite well. Have the buses way, that I notice from some Age UK polling of always been the poorer relation in public transport terms and what needs to be done to turn that around? pensioners themselves that they value the bus pass Given that most people using public transport use above the winter fuel allowance, for example. So it is buses, why is it that we have this attitude that buses clearly valued. If you asked pensioners themselves tend to be the first victim of any cuts? what priority they would give among the benefits they Stephen Joseph: It is really a version of the previous get, that implies that bus passes would be at the top answer I gave, which is that bus funding is atomised. of the list. Even if economic theory would tell you It comes in lots of different packages. I am not saying that you might want to do things with bus passes, it that Government sat down and said, “We are going to implies that electorally and politically there might be do this for buses and this for rail,” because they some issues with that. couldn’t. You had different Government Departments Secondly, however, the point you made about job making decisions about different funding for buses, seekers is very relevant. There is a real question for a the Department for Transport in the case of the Bus number of other Government Departments than Service Operators Grant, and the Department for Transport. There is an assumption among the policy Communities and Local Government in relation to making they are doing at the moment that buses will local authority revenue support and the allocations be there and that local authorities or operators will within that. You have had changes in fuel duty and so provide those bus services. In the case of Welfare to on being made by the Treasury. All of these have had Work or the freeing up of schools or access to an impact on bus services. hospitals and health services, where all the If you had single funding for bus services from central Government’s reforms are pushing people in the Government in the way that rail has a single pot of direction of having the freedom to choose and perhaps money handled by the Department for Transport, you in some cases having to travel further, the bus services would be able to make rather better choices in this will not be there, and yet it implies that policy makers kind of thing, but that’s not the way it has worked. In want them to be there. That requires—and we will be addition, there is a problem that has particularly saying this across Government next week with a emerged for this Government’s emphasis on localism, number of charities—that Government needs to take which in principle we support, which is that, on the a co-ordinated view of this and look at other kinds of cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Transport Committee: Evidence Ev 13

25 January 2011 David Sidebottom, Stephen Morris, Stephen Joseph and Greg Lewis national funding for bus services but recognise the that when you tell people about the bus services wider national value that they give. available lots of people who use cars all the time start to use them. So it’s fair to say that authorities and Q84 Gavin Shuker: Assuming that constant change operators have not always been very good at is here to stay in the bus industry as a result of the promotion, marketing and information. spending review, and we are expecting to see changes Stephen Morris: I would agree that local authorities in services, how good is the industry at consulting particularly are very variable in that respect. about change with passengers? Consultation may just consist of, “This is what we David Sidebottom: It is very patchy. As somebody propose to do. Take it or leave it,” or, “Do you like else said previously, we have done an extensive study, that or do you not like it?” Surrey County Council writing and talking to authorities about what they are recently have done a very good and open-ended doing, and we have seen two extremes, at both ends consultation. The first phase of that has come out with of the spectrum. One authority has made a decision some very beneficial results and quite substantial and then has gone out with a form of consultation cost savings. to the public and sought views, but the decision has When bus operators are altering their commercial fundamentally been made. But equally, Central networks, there is very little history of any Bedfordshire did a very thoughtful and considered consultation when bus operators change their own consultation where they put options to passengers and networks outside the local authority structure. We feel residents about how to rank certain things. They have that that is something that also needs addressing. The set aside a bit of money, £100,000—more than a bit classic case recently was the one in Milton Keynes of money—to look at community transport. So it can where the network was substantially revamped by the be done. In our letters to all authorities we suggested bus company with no consultation. There was a a best practice approach to consultation because it’s substantial backlash from the public and part of what often that the passenger is not part of the partnership. was there before has had to be put back into place. We have heard previously about how important it is But, typically, the commercial bus operator will not for an operator and an authority to work in consult on changes on the commercial network. partnership, but often the passenger is missed out of that, so it is patchy at best. Q85 Gavin Shuker: Mr Morris, you cited Somerset Greg Lewis: We personally think the needs and views in your evidence. Is that correct? of older people need to be taken into account in all Stephen Morris: Yes. transport planning. Our concern is that the Government’s own citizenship survey showed that Q86 Gavin Shuker: What was the particular issue older people were less likely than younger groups to there? Why did it make it a decent case in point feel that they could influence decisions locally. about consultation? Bearing in mind the levels of social exclusion and Stephen Morris: To the best of my knowledge, isolation amongst older people and the importance Somerset are not actually consulting on the changes they place on the provision of bus services, an that they are going to put into place for the service integrated approach to ensuring their views are taken cuts. I certainly have not been able to find evidence into account is very important. of consultation anyway. Stephen Joseph: It is worth saying we have been doing a lot of work recently in finding out what is Q87 Gavin Shuker: I have one other question. actually going on on the ground in relation to local Consultation is great, but if the money is not there, authorities. One of the things we have found, as Mr what is the point in consulting? Sidebottom said, is a huge variation in consultation David Sidebottom: I think it is Stephen’s point that is going on but, also, in the ability of operators particularly. Particularly it is about engagement. In the and local authorities to think broadly. Our local bus industry—and I say generally—there are campaign group in Leicester did a lot of very, very operators and authorities that do it on a regular basis, detailed work with operators and local authorities and it is about informing passengers. One of the when the local authorities then proposed cutting a concerns that we have, whatever the decision and number of services and were able to suggest creative whatever we think about consultation or transparency, ways of changing or adding to commercial routes, is that there is an impact here and passengers need to diverting them to serve areas which might have more be informed. Our overriding concern is that those passengers and so on. They were able to save about a people who are elected to make the decision may not third of the proposed cuts. Sometimes, that kind of be armed with all the evidence in terms of impact detailed discussion, starting from looking at what the assessments, patronage and the detail to make those markets are that you are trying to serve and where decisions. It is knowing that a passenger has absolute the business is, isn’t done, because, particularly with faith in the process and then, when the decision is tendered services, there has been a tendency by both taken, how they then find out, because they don’t want authorities and operators to think that these are to get to the bus stop on a Monday morning and find provided for a declining market rather than thinking out the bus has gone. That is the crux of this. creatively about how exactly you can provide them or even telling people about them. Q88 Gavin Shuker: Mr Sidebottom, you said in your One of the pieces of evidence in fact from other pieces evidence: “In a time of cut-backs it is important that of work by the Government—the sustainable travel the industry does not marginalise the passenger. It is towns work and personalised journey planning—is crucial that passengers’ views are sought and taken cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Ev 14 Transport Committee: Evidence

25 January 2011 David Sidebottom, Stephen Morris, Stephen Joseph and Greg Lewis into account when determining priorities.” What are up and down. In the urban areas in England, as I see passengers’ priorities generally when consultation from these figures, the usage has actually gone down. goes out? This is over the last six years, from 2004, that we David Sidebottom: In terms of the actual journey have this information. What are your thoughts itself, we have done some research into passenger accounting for this, because it seems to me there is priorities for improvement and the number one there quite a lot of regional variation going on? The danger is improving punctuality. I think we heard from the for us is just to look at it all as one big picture of bus previous session that, if you can get buses to arrive services, but when you break it down you are seeing on time and get to the destination on time, and where lots of different pictures. operators and authorities work in partnership to David Sidebottom: Outside of London—we have deliver that, it can be successful. We can all rattle off heard about Oxford, Nottingham and Brighton—there the same areas that win the awards every year for best is great attention to a partnership working and a lot of operator of the year and so on, but that is the number attention to marketing. A lot of commercial operators one priority: passengers want buses to arrive on time, do see themselves as almost on the high street and get them to their destination on time, and provide they think that way when attracting new customers value for money. and hanging on to customers. There is a lot of engagement through things like Facebook, and it is Q89 Chair: Are fares important? very modern and very alive. In other areas, it is more David Sidebottom: We tend to look at it more from a driven by the big operating groups in terms of core value for money perspective. With regard to culture. I am talking about Stagecoach and First. It is individual fares, because of the nature of the low fare driven that way. But equally, in London of course you aspects, sticking another 20p on may not tip the work very much on a franchise level, where a lot of journey for the passenger. It is the overall experience, money goes into that and the rewards for operators and the work we have done through passenger are quite significant. satisfaction has focused on that. We talked earlier about the quality contracts framework, which has not been taken up as yet. Q90 Gavin Shuker: Just finally, Chair, at the Interestingly, in West Yorkshire we have just done moment there is no statutory requirement for bus some recent consultation with passengers there about companies to consult before a major change. Do you some next steps, moving towards a quality contract. think there is a case to be made for that, considering We don’t know whether that will deliver the kind of the evidence that you have just given? things that passengers want, but we are keen to see Stephen Morris: We would particularly like to see the what the inputs are from passengers in terms of a bus operators adopting a voluntary code of consultation. The problem comes that, if you make it franchise and what the outputs are from a passenger statutory, for a small operator it’s additional cost and perspective. But the difference between London and red tape. Many of the smaller operators are poised on outside is revenue and the surety of the fact that there the edge at the moment. They are finding it difficult is some stability in the market working to a franchise. to run services profitably, and they are getting more Stephen Joseph: From observation, it is down to and more bound up in legislation on this, that and the variations between both local authorities and operators other. If you took another approach and said that in fact, and not just in relation to buses but wider service changes over a certain level would need policy. We have seen local authorities who have consultation, I think we would end up with the worst boasted about taking up bus lanes and freeing up of all worlds, with the larger operators making lots space for motorists. In those circumstances, as and lots of small cuts to try and get round that, with previous comments have been made, as your previous more and more uncertainty. In an ideal world we session said, buses will struggle. On the other hand, would like to see the bus operators doing it on a where you have had wider supported policies, where voluntary basis. But if that weren’t to work then, yes, buses have been given access to the centre of the we would support a statutory approach. town, where there have been some parking charges Gavin Shuker: I think many people would be imposed to reflect the costs of providing car parking surprised to hear there isn’t already a voluntary code. as opposed to subsidising parking, making it very Chair: Last one, Mr Shuker. cheap, then you have seen people using buses. On the other hand, there are operators who have not Q91 Gavin Shuker: My apologies, Chair. Would been particularly responsive and some that are very anyone else have any views on bringing in a good. In a way, there are smaller operators like Trent statutory requirement? Barton. Western Greyhound was mentioned in the David Sidebottom: I think a voluntary requirement previous session. But also, one thing I have noticed is might be something. It is small steps, yes. a variation between subsidiaries of some of the big groups. You find that some subsidiaries, depending on Q92 Kwasi Kwarteng: Looking at these figures and the local manager, are very good at building up local hearing a lot of the evidence, I feel that there is not services and working with local authorities, and others enough attention given to the regional variation. who seem to have lost interest, where the focus is Clearly, in London, in the last six years, something entirely on the bottom line this week and making very has happened and people are using buses a lot more. short-term changes. What you see is a bit of a In other areas, if you look at the figures for the English patchwork across the country and, in a way, because rural areas, it is much more of a mixed picture; it goes buses are very local, you would expect that. cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Transport Committee: Evidence Ev 15

25 January 2011 David Sidebottom, Stephen Morris, Stephen Joseph and Greg Lewis

I come back to the point I made earlier, which is that, localised than local bus services. So a solution that unfortunately, if you are trying to have a national will work in town A may not necessarily work in the programme for, say, getting people off welfare and same way in town B, but there are, obviously, certain into work, that gives you a problem, because in some common components. In particular, there is a real places it will simply be very difficult for the bus commitment to the locality. We very often see services to be there. management being moved on from one location after a very short time and we end up with a poor bus Q93 Kwasi Kwarteng: Just following up on that, service in that area. One of the things that is notable you were saying that clearly there are these two is that the places that have really good bus services are factors. There is the local authority, and there is a places where local management has stayed in place a massive variation amongst those; and there are the long time and developed a good understanding of the operators, and there is a massive variation amongst locality and a real empathy with the local people and those. If you times those two together, you are going the local authority. That is very often a factor that to get an infinitely varied picture. That being the case, makes things work well, along with a sort of local do you think there is anything that perhaps a political will to make sure that the bus service works. Government could do to try and cull best practice and standardise that across the country, or do you think it Q94 Paul Maynard: Mr Sidebottom, could I return is inevitable that the local differences will mean that to the issue of consultation? Irrespective of whether it we will always have a system with this patchwork, as is statutory or voluntary, would you not agree that the you say—with different quality? quality of the consultation is what matters? David Sidebottom: The local difference will always David Sidebottom: Yes. exist. The work we have done through our passenger satisfaction research has at least levelled out some. Q95 Paul Maynard: Would it be too crude to You can see from the bottom to the top of the league suggest that good consultation looks at the network table that there is little variation. There is about 8% overall and a poorer consultation focuses on retaining in general, if that. It is part of our work, particularly an individual route or not retaining it? Can you about best practice, trying to unearth from that explain how Passenger Focus can facilitate good research and find out what the nuggets are that make consultation with bus surgeries and the like? What do someone top of the pile, if you like, in terms of they amount to? passengers, because I think everyone wants to work Chair: What’s good consultation? to have more and happier passengers on buses. That, David Sidebottom: Good consultation is about putting I think, is a success story. It happens, and I don’t think good information in the hands of the recipient in terms the industry is particularly good at telling that story, of what options are available, explaining it so that but I think we will always have those local variations. passengers or other residents will completely engage Stephen Joseph: There is a role for spreading good with the process, a commitment to go back with, practice. I have heard the current Minister for Local “Here are the decisions we have taken and how we Transport, Norman Baker, talk on radio about the need have arrived at them,” and then something about for the Local Government Association to do more in measuring the impact of them down the line. The this area. Certainly, we have noticed that as local work that we have just started now in looking at what authority councillors—and I know a number of authorities are doing around England with the members here have been local authority councillors— proposed cuts to tendered services is reinforcing the it is quite difficult to find out what other authorities best practice. As Stephen said, now we need to get are doing in relation to bus services, providing the into resources allowing individual conversations with services and what good practice there is about. local authorities but also through the likes of the There are a lot of myths around as well, on, for Association of Transport Co-ordinating Officers, who example, the Competition Act meaning that you can’t plan the services, the likes of LGA and other fora as possibly have operators co-operating. We have done well, to make sure that from what we learn from this some work, as our evidence said, in St Albans in exercise there will never be changes again in the Hertfordshire, which is about disproving that and future. having four bus operators, two train operators, the city But I think you are right. It has to be at a network and county council working together to plan buses level because when you look at the number and the across a whole area as a voluntary partnership, frequency of individual service changes they are because we wanted to show, particularly with the probably far too often to have that level of changes in the Local Transport Act 2008, that that consultation. But we do know from the research from co-operation is much easier. There are a lot of passengers where there are service changes that the councils that don’t know that, and even Cabinet one way they want to find out is on the bus or at the Members for Transport who don’t necessarily know bus stop. That is a worry for us in terms of where what is possible and what is being used, and I think some of the cuts are made in terms of information there is a role for good practice. Maybe this is for provision. Government across the piece, working with the LGA and the local government family, to do a bit more in Q96 Paul Maynard: Can I just ask Mr Joseph this that area as well. on a wholly separate matter? I have listened very Stephen Morris: There are certainly best practice carefully to all you have said today, and you have fired factors that go across all the best bus operations. But, my imagination, which might frighten you. Clearly, as essentially, there are few businesses that are more a policy maker, I feel I have to start to consider more cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Ev 16 Transport Committee: Evidence

25 January 2011 David Sidebottom, Stephen Morris, Stephen Joseph and Greg Lewis publicly funded transport as a concept, rather than schools and colleges, to provide services there and public transport. To what extent, from your experience then build networks on the back of those, and that of your mini-campaigns around the country, do you hasn’t always been looked at. Community transport think that voluntary providers and the third sector in can do that, and Hackney Community Transport has the form of community interest companies are able to been very successful in doing that. be the innovators in that gap in the publicly funded transport market between the commercially viable and Q98 Julian Sturdy: We have talked about sharing the commercially unviable? I am sorry, but that is a good practice, looking at the networks overall and complex question. better partnership workings, with all of which I agree. Chair: Can community, social enterprise, voluntary But isn’t the key thing connectivity? This is something sector groups, fill the gap? that frustrates me at a local level when I see great park Stephen Joseph: I think they can fill some gaps. We and rides around the city I represent but then the lack have noticed that some of the better consultations that of connectivity into those park and rides. Where I live have been run by local authorities are actively we have a bus service which provides poor engaging in the community transport sector, looking connectivity into the local station, and if that was at what they can do and seeing whether it is possible better publicised and better sold then I think the bus to help them fill some of the gaps being left by operator could build on that. mainstream fixed route services being withdrawn. I Also, across the region we see local authorities think that is valuable, but it does depend very much running different transport access schemes, and then on the capacity of the local community transport the lack of joined-up thinking where you cross over providers. In some cases, that capacity will be there, one border and you are on to a different transport and in other cases it won’t be and will be affected by access scheme as well. Then it’s not about other cuts made by local authorities or indeed by connectivity within the bus services, but it’s national Government in support of the voluntary connectivity of buses to rail, airports, etcetera. How sector. Age UK may want to come in on this, because do you think we can build upon that? I know it’s a they are a provider in some ways. very broad thing but, to me, it’s quite frustrating that In relation to community interest companies, there are we are at this stage. a number of community interest companies now Stephen Joseph: In relation to stations specifically, running bus services in various places. There is one in we promoted, as an organisation, the concept of Brighton and one in the Yorkshire Dales, and Hackney station travel plans, which has been taken up by the Community Transport is a large one. They would Government and the rail industry. The remarkable argue that, given a level playing field, they can fill thing about the 30-odd pilot travel plans is the extent some gaps, but this depends very much on the scale and pace of reductions in other services. What we are to which they have revealed, just by getting people to seeing in some areas is a very, very large speedy talk to each other, the lack of common-sense reduction in services. connections that have happened. For example, the We have been looking, as I said, at services around Leighton Buzzard station travel plan found that all the the country. Hartlepool Council, for instance, is buses arriving at the station arrived two minutes after talking about taking out all supported services after all the peak hour trains to London. That kind of April, and that includes Dial-a-Ride and hospital framework of travel planning for stations, and, indeed, buses. So they are not even supporting some in relation to my previous answer, to other big journey community transport services. In those circumstances attractors like schools, colleges and hospitals and so it will be very hard for community interests or any on, is a way into this and can be used to help the other kind of provider to step in. people who are generating travel to think about how people are going to get there. I know from the Q97 Chair: You said, Mr Joseph, “some of the gap”. experience we have had in Hertfordshire that How much of the gap could be filled by these Hertfordshire have a partnership, as a county council, enterprises and will it vary in different parts of the with Lister Hospital where they help the hospital staff country? work out how patients are going to meet Stephen Joseph: I think it will vary in different parts appointments. That is very rare and needs to be much of the country. One of the operators we have been more widely used as an example. working with in the St Albans partnership is in fact You are right to focus on connectivity. It is something the university of Hertfordshire, which has its own bus that needs to be given much more emphasis. We are service. It runs an 80-vehicle bus operation, which currently doing some work on door-to-door journeys, they found more effective than contracting it, as some looking at how you can make some of the best other universities have done. They’ve said that they practice more general. The Government’s stated have been able to build a large local network on the ambition on smart cards will help in this area. But, as back of staff and student services. It is not a social well as through-ticketing and integrated fares, you enterprise as such, but it’s run as a subsidiary to the also need proper door-to-door information, better university. They have been able to take, as a local interchanges and connections. All of those things are operator and as one rooted in the community, some not provided routinely. In relation to stations, one of decisions that a larger and more remote commercial the things that should not be lost in reforming rail operator might not have taken. franchises and making them more light-touch is some There is an opportunity where you have large journey of the integration, because that won’t always be generators, if you like, such as universities, hospitals, provided by the market. It will need to be specified in cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Transport Committee: Evidence Ev 17

25 January 2011 David Sidebottom, Stephen Morris, Stephen Joseph and Greg Lewis franchises, and rail franchises are a way in which that that is probably the other side of the argument in can be done. looking at hospital administration to ensure that older David Sidebottom: On that particular point as well, people or people who rely on public transport can commercially, bus operators will say there is not a make those hospital appointments, for example. great demand to take people from certain estates to the train station because there is not the demand there, Q99 Steve Baker: Is it in operators’ commercial so it is something like marketing, I guess. But, interests to co-operate in respect of connectivity? I ask equally, with the opportunity for authorities to look at the question deliberately simply. statutory quality partnerships and quality contracts, Chair: Who has a view on that? Is it in operators’ the specification might come in that in terms of, if interests? that’s a model, it will force operators to bid for that Stephen Morris: It depends very much on the particular kind of work. But, equally, the smart circumstance. There are situations where diverting a ticketing one is a good one because a passenger bus service into a railway station will extend the cannot get integrated inter-transport if he or she is journey time for the bulk of passengers who just want carrying a ticket for a particular operator in a corridor to get into the town centre. In that situation it is seen where there are two or three bus operations. They can very much as a disincentive by the bus operator rather only use it on one operator and buses go sailing past. than serving the bulk of the market in a more It is right at that level that passengers need to feel part appropriate way. On other hand, as in the situation of the integration. I have already cited in Cornwall, the operator there Also, with regard to planning as well, we have seen has seen tremendous commercial opportunities in the big redevelopment of Birmingham New Street being able to link up services at interchanges, and that going on at the moment and there is an issue there has certainly worked very favourably in the about how bus stops are being moved away from operator’s favour. Birmingham New Street. It is the whole planning Stephen Joseph: I think the operator won’t always see thing of making sure that everyone is involved in the it as in their interests to do this. In fact, competition planning of these big schemes. law has, as was previously mentioned, in the past been Stephen Morris: There have been some very good applied in such a way as to give priority to the examples of it in Cornwall and in Lincolnshire, on a theoretical extra operator rather than co-operation rural basis, where, in Cornwall, Western Greyhound between operators. From an operator perspective, you have developed a number of hubs and they have want people to travel on your own buses and so you opened up all sorts of journey opportunities with just do tickets that are only valid on your own buses. From one simple change that wasn’t there before. In a public perspective, what you want is to be able to Lincolnshire, there is the Connect network, where a go out by the first operator that comes to your stop rural service just goes as far as the main road and and come back by the first operator that arrives. There there is a connection point there where it links into is a conflict between the individual operator interests a trunk service. That has been very successful. I do and network benefits. It is one of the areas, referring understand the rural part of that network is under to an earlier question of yours about market failure, threat from the service cuts. that pervades transport across the entire thing. One very simple barrier to making connectivity work Transport is an area that has massive market failure all between bus services is the Traffic Commissioners’ the way through it and this is one area where network window whereby the Traffic Commissioner will allow benefits just simply aren’t recognised enough, either a service to be up to one minute early or five minutes in operators’ interests or, in some ways, in the way in late, and if an incoming service is running late there which the operators are regulated. is pressure on the driver of the connecting service to leave on time or within five minutes rather than wait Q100 Steve Baker: It is very interesting that you talk for that service. I believe the Traffic Commissioners about that market failure because that is really the are prepared to be a little bit more flexible in those point I was, of course, driving at. If it is in an circumstances, but the bus operators need to be aware operator’s interests to maximise throughput, surely it of that and need to communicate that to their drivers. is in their interests to serve the maximum number of Greg Lewis: I would agree with most of that. The key people with the maximum interchange between issue for older people is the accessibility or reliability different transport services. Actually, you have of services, and connectivity is going to be a vital part answered my second question inasmuch as I think we of that. If they feel that they are going to be stranded have all agreed that operators will sometimes not talk in a town centre and not be able to travel on to their to each other where they otherwise might in order to destination, if there is going to be a significant delay better serve people’s interests precisely because they or even a significant amount of anxiety in making that are so heavily regulated in that regard. Then, on top journey, they won’t make that journey. That is the of all of that, we seem to be saying that that’s a market important point for them. failure, when in fact it seems to me it’s a regulatory There is one point about hospitals, which is quite an failure. Where does that leave us? important one, which is probably about hospital Chair: Who would like to try and give a short answer administration as much as provision of bus services. on that one? For people who need to travel long distances to make Stephen Joseph: A short answer on that. First, when hospital appointments, there is not much point in I said “market failures”, I was talking in a very broad making those early in the morning if there is no bus sense that transport across the piece, including road service for them to utilise to get there. But, as I say, transport, has large market failures in relation to cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Ev 18 Transport Committee: Evidence

25 January 2011 David Sidebottom, Stephen Morris, Stephen Joseph and Greg Lewis people causing congestion for other people in other services to schools and colleges. We are also seeing cars and in buses and, also, wider environmental reductions or ending of concessionary fares for other impacts of pollution and, indeed, climate change and groups, like Mr Leech’s comment earlier. For so on. Those are all market failures which economists example, East Cheshire is removing services to would argue are not fully priced in. You talked about colleges, and Darlington is moving concessionary road pricing earlier and that would be one way in fares to the statutory minimum of 9.30, away from a which you could do that. more generous scheme. In relation to this, the problem has been not that they In fact, young people are going to be particularly hit have been too heavily regulated but they have been because some authorities are reducing the regulated in the wrong way, with the wrong concessions, so that they have to pay more, and incentives. That was changed a bit with the 2008 reducing concessions to colleges at a time of the Local Transport Act. The St Albans pilot I mentioned ending of the Education Maintenance Allowance, that we have been involved in was about proving that. which has partly supported the transport cost to Once you had got the changes in there, it essentially colleges. So that is a double whammy that hasn’t been means that, where the local authority says it is in the fully appreciated yet. public interest for operators to co-operate together, then it is deemed to be in the public interest, the Q103 Julie Hilling: Is it too easy for operators to Competition Act doesn’t apply and the penalties that stop services and put them in the hands of local were referred to earlier don’t apply. It seems to me authorities—I have forgotten the correct word—and, I that is the right direction. We have seen operators in guess, for the local authorities to stop services. Is it places like Oxford, Nottingham and so on being too easy? prepared to join together to do partnerships that are in David Sidebottom: I think, traditionally, that has been the wider public interest. the case. We will see now, with the impact of cuts to BSOG and maybe concessionary fares reimbursement Q101 Steve Baker: A ﬁnal yes or no question. Is it in the next year or two, tipping some of those services true or not that bus operation is characterised by which traditionally would have been put into the subsidies, price controls, heavy intervention and lack hands of councils. But I just wonder as well how of market in the scarcest resource, which is road much councils have been supporting services for space? many years now without reviewing the network on a Chair: Who can offer, if they wish to, a short answer more regular basis. It has been continuing on, and we to that one? have reached a point now where the scale of the cuts Stephen Joseph: Yes, and so is other road transport. and the impact is going to be quite severe, rather than They all have subsidies and market failures in them. being marginalised over a particular time.

Q102 Julie Hilling: If buses are the building block Q104 Julie Hilling: What should all the partners be of public transport—and I think they, are in terms of doing in terms of protecting the service and making it that connectivity that we have talked about—can I ask better going forward? What is the responsibility of ﬁrst of all who you think is going to be hardest hit by everybody? the changes that are likely to happen? We have talked Stephen Joseph: In our evidence we talked about a a little bit about older people, but are there other range of things that we thought both local authorities groups in society that are going to be hard hit by the and national Government need to look at. We talked reduction in services? about better commissioning of services across the David Sidebottom: I think the immediate impact piece, as I think has already been talked about, through the local subsidy will affect particularly the bringing ordinary tendered services together with marginal services now which are supported by schools and social services transport, looking across councils. What we are seeing very generally is the piece and tendering them together so there would weakened services and evening and mid-week be better commissioning. The social enterprise point services being cut. That is going to affect, has already been mentioned and looking at options disproportionately, those people that obviously use there. There are the kinds of quality partnerships we them, which will be shift workers, maybe, and people have talked about and options including creative use going into town, not just for the night out but who of the quality contract legislation so that, rather than work in the places that serve the night out. I think tendering little bits of services, you might tender there is something there about that and older whole networks. Also, we talked in our evidence passengers, I think, particularly as well. But the about looking at integrating taxis and buses, as evidence coming through is that shift for edge-of-town happens in other European countries. That is rural inter-urban services, and people who rely on something the Conservatives talked about in those. Yes, there may be higher car ownership in some opposition and we have seen that happen in of the areas we are talking about, but there is still a Government. Also, we need better marketing and signiﬁcant market there which will be disadvantaged promotion, as I have said. by this. But, for Government, there is an issue about other Stephen Joseph: The surveys we have done have Government Departments recognising and perhaps shown quite a wide variation in what local authorities bringing funding to the table for buses where it’s are doing, but what you are seeing, apart from the cuts important for meeting their objectives. One example in keeping weekend services, is cuts in a lot of rural is the WorkWise Scheme that has been funded by the services in places like Cumbria and Lincolnshire, in Department for Work and Pensions which has been cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG01 Source: /MILES/PKU/INPUT/012933/012933_o001_th_110125 - Buses OE1 - Corrected - TranC 25 January 2011.xml

Transport Committee: Evidence Ev 19

25 January 2011 David Sidebottom, Stephen Morris, Stephen Joseph and Greg Lewis about helping job seekers. That has not, I think, been developments and parking standards that ought to be continued and certainly the local authorities that have kept because they have been very helpful in providing run passenger transport—the ITAs in particular—have a framework within which markets can organise found that it has been very valuable. themselves. Long term, and this perhaps goes to Mr Baker’s point about being market orientated, we might want to look Q105 Chair: Mr Sidebottom, Passenger Focus is at what a number of other countries, including the US, under review in terms of its remit and its budgeting. do in relation to providing employer-provided Can you tell us where those discussions are up to and vouchers for transport to work, which was done partly are they likely to affect any of the work you have been to recognise market failures, like the failure to charge discussing with us this morning? for parking, of taxing parking at work as benefit in David Sidebottom: Following the announcement from kind and that kind of thing, which has also been used the Cabinet Office review of quangos, we are to be in places like the Irish Republic and so on. retained but substantially reformed. We are in the final Finally, I think there is an issue about the planning throes of conversation with the Department over our system. The Government is deregulating the planning final budget, and that will be announced, I believe, system at the moment; it is revising planning policy. towards the end of this financial year. I think there are some things in current planning Chair: Thank you very much, gentlemen, for coming policy on transport assessments for new major and answering our questions. cobber Pack: U PL: COE1 [SE] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Ev 20 Transport Committee: Evidence

Tuesday 22 March 2011

Members present: Mrs Louise Ellman (Chair)

Kwasi Kwarteng Paul Maynard Mr John Leech Iain Stewart ______

Examination of Witnesses

Witnesses: Robert Montgomery, Service Performance Director, Stagecoach UK Bus, Mike Cooper, Managing Director, Arriva UK Bus, Roger Cotterell, Finance Manager, Compass Travel (Sussex) Ltd, Ben Colson, Managing Director, Go West Travel Ltd T/A Norfolk Green, and Keith Halstead, Chief Executive, Community Transport Association UK, gave evidence.

Q106 Chair: Good morning, gentlemen, and come back again, but a bit of after work activity goes welcome to the Transport Select Committee. Could out of the window really. That is one thing. you give your name and the organisation you Another example would be where we have a route that represent, please? This is for our records. I will start is successful—just—currently, and by local authority at the end here. funding it is extended seven miles to the next village, Keith Halstead: Keith Halstead, the Community where it picks up only people over 60 or students, Transport Association. neither of whom pay. There are going to be some cuts Roger Cotterell: Roger Cotterell from Compass to that element of it. In part, it is route cut, and, in Travel in West Sussex. part, it is number of journeys being cut. Ben Colson: Ben Colson from Go West Travel which trades as Norfolk Green. Q110 Chair: Mr Cooper, could you tell us what Robert Montgomery: Bob Montgomery, Stagecoach services you have withdrawn or you are planning to UK Bus. withdraw? Mike Cooper: Mike Cooper, Arriva. Mike Cooper: Building on what Mr Colson has said, it is impossible to generalise, Mrs Ellman, because it Q107 Chair: Thank you very much. Could each of depends on the severity of the cuts that we are facing, you tell me what changes you have made to the bus which do differ in different parts of the UK. To give services you run and what changes you are planning you a flavour perhaps, in Durham we are reducing as a result of the changes in the Comprehensive mileage by 6%, in North Yorkshire by 6%, in Spending Review? Who would like to start? Staffordshire by 7%, and in Derbyshire the current Ben Colson: I am happy to start if you want. We intention, although we are still in negotiation with the haven’t made any changes yet, but they are in the local authority, is to reduce mileage by 10%, in the process of being made. They start on 9 April, at which sorts of ways that Mr Colson was discussing earlier. point we will be making a number of reductions as a result of a reduction in concessionary reimbursement, Q111 Chair: Could you give us any examples of the in particular, but also local bus subsidy funding. We type of services that are being withdrawn? are not at this stage putting our fares up, but we are Mike Cooper: As Mr Colson said, they are a going to keep it under close review. It may yet come, combination of things. They could be frequencies that but my hope would be that it doesn’t. That will are being pared back, moving from a 10-minute depend much more on diesel prices. service to a 12-minute service, or it could be routes that are being cut as we find that what were largely Q108 Chair: What sort of reductions of service are profitable routes we know will become deeply you making? unprofitable in the future. Ben Colson: We have had about a 7% cut in our funding, under the rider of those two headings, and Q112 Chair: Are these rural services or urban we are cutting about 4% or 5% of our journeys— services? mileage—in order to minimise the impact on our Mike Cooper: It depends, as I say, particularly on the customer base, because we don’t want to see our severity of the cuts in the concessionary scheme. We customer base eroded, if we can avoid it. have been particularly badly hit in the Midlands, in more rural areas and in the shire counties again, which Q109 Chair: Could you give me any examples of the are in more rural areas. We are tending to find that kind of bus services that you have decided to the PTE areas—the Passenger Transport Executives— withdraw? have been less badly cut by the concessionary Ben Colson: I can give you perhaps a couple that reductions and therefore they are seeing fewer illustrate the breadth of that. You have to bear in mind, reductions. Mrs Ellman, that we work in a very rural area. Generally speaking, the last bus is at about 7 o’clock Q113 Chair: Do these services involve journeys to in the evening, and from April onwards that will be work or to social events? What type of services are nearer 6 o’clock. People still have to go to work and they? cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Transport Committee: Evidence Ev 21

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead

Mike Cooper: 65% of Arriva’s services—and it will people on to our buses and good value fares have been be similar to the industry as a whole—are journeys to part of that equation. We are very wary of imposing work, to college or taking people to the high street to significant fares increases and are working very hard shop. So they are two thirds of our services. Clearly, to try and find the best way of dealing with the cuts all of those will be affected to a greater or lesser without significant fares increases. In the areas where extent. there are significant concessionary fare revenue reductions, then there will be slightly higher fares Q114 Chair: The cutbacks will involve journeys to increases, but we are also looking at service levels, work and college as well as to other things. mileage and so on to get the best balance. Mike Cooper: They will affect commuters, yes. Q120 Chair: What level of increases? Q115 Chair: What about fares? Are fares increasing? Robert Montgomery: Taking account of the fuel Mike Cooper: Fares are increasing. Could I preface increases which are ongoing at the moment as well, all of this, and I think Arriva is probably similar to we would normally have expected fares increases of the rest of the industry, by saying that we are working the order of about 3% this year, just to deal with the hard on a self-help programme? We are increasing increasing costs of fuel and labour. Where there are productivity and we are taking out costs wherever we significant reductions in concessionary fare can. Non-customer facing activities are being reimbursement, then we need to push a little bit removed, and that is our first response. But, yes, fares harder, and in some cases those increases will range will increase, and there are parts of the UK where they up to 5%, maybe towards 6%, but we are trying to will be increased beyond inflation. avoid going to that level if we possibly can.

Q116 Chair: What sort of figures do you think they Q121 Chair: Are these changes in rural areas rather will increase by? What sort of percentage increase? than urban areas or are both affected? Mike Cooper: Could I give you a flavour of that? The Robert Montgomery: They are mixed. One of the DfT believes that concessionary income is being areas where we have had a significant impact in reduced by 12.1% around the UK. Arriva believes that concessionary fares reimbursement is in Torquay, for it needs to increase fares by 6.7% beyond the typical example. You are talking about a reasonably urban inflationary increase in order to claw back that area where there is impact. The bulk of the tendered amount. service contracts tend to be impacting on Sunday services, evening services and rural services. Q117 Chair: What figure is that then—over 6% beyond inflation? Q122 Chair: Mr Cotterell, what can you tell us about Mike Cooper: It varies. As I said, it is difficult to changes coming about, reductions of services and generalise. To give you some examples of that, in fare increases? Northumberland and in Newcastle and Teesside, we Roger Cotterell: We are still in debate with the local are increasing fares to the tune of about 6% to 7%. authority to try and establish how we are going to In Derbyshire, Leicestershire, Staffordshire, Telford & react. There are certain things on the table which may Wrekin, they are going up between 6% and 8%. It be what we do, but at this point in time we are not does vary. In other parts of the country, particularly in clear what the concessionary reimbursement is going PTE areas, the increases are less acute. to be. Consequently, we don’t understand the financial balance within the organisation, and consequently we Q118 Chair: Mr Montgomery, would you like to can’t really make judgments at this time. comment? Robert Montgomery: I think the immediate effect on Q123 Chair: You are saying there is nothing that you us is predominantly to do with local authorities have decided at the moment and you can’t make any cancelling tendered service contracts. So it is a case assessment? of deciding they no longer want to pay for some of Roger Cotterell: There is nothing firm and final at this the rural services and some evening and Sunday point in time that we know we are going to do. We services. Most of those cuts are coming in are a small rural bus company, just dealing with the immediately. They tend to be cuts from 1 April. The one local authority or predominantly with the one biggest impact is across the Midlands, towards the local authority. Only yesterday did we get an south. Again, those are local authority decisions. They indication of what we think the concessionary are paying for those services; they have chosen not to reimbursement may be, but we need further pay for them. So we are seeing reductions in those. negotiation on that number. When we understand how The more uncertain area relates to concessions, that is going to pan out, then we can work out how because we are still in negotiation with about 50% of that relates to the rest of the company. English authorities on concession payments for this year. We don’t even know at this moment exactly Q124 Chair: When do you think you will have a what we are going to be paid for concessions. So there clearer picture about that? is an impact there as well, but it is very, very mixed. Roger Cotterell: To be honest, I’m not sure. We are working closely with West Sussex, who we are hoping Q119 Chair: What about fares increases? to see again this week, to take the dialogue forward, Robert Montgomery: In terms of fares, we have but the whole process has got held up and we are worked very hard in the last seven years to get more where we are. Basically, we are waiting for another cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Ev 22 Transport Committee: Evidence

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead round of the debates with the consultants that are Keith Halstead: Certainly, in the North-West, some in looking after the numbers for West Sussex to come the West Midlands, and quite a few regions, because back to us on our submission to them. The debate is they are often funded through regional development ongoing. All I know is that there is a 15 April deadline agencies. Obviously, with all the changes emerging to for submissions to that agency in order to know where regional development agencies at the moment, those we are for the appeal. particular services have reduced from about 60 to 28 now across England. Q125 Chair: By that date, do you think you will know more of what changes you are going to make? Q129 Mr Leech: Before the spending review, there Roger Cotterell: I hope so because that is the deadline was a debate about whether or not the free bus passes for appeals, I understand. By then, we should know, should be retained and whether that money could be finally, exactly what the issue will be. spent better within the bus industry. Is there any evidence that the services that have been cut as a Q126 Chair: Mr Halstead, how is community result of the spending review affect the people who transport affected by the changes? have free bus passes more, and, therefore, the people Keith Halstead: Chair, there seem to be three main who still have their free bus basses no longer are able strands of the impact of the spending review at the to get a bus because their services are being cut? moment which are emerging from how local Robert Montgomery: If I could respond to that, the authorities respond to that. The first is a reduction in answer to that is probably a bit mixed. The tendered grants from local authorities to community transport services which we have seen cut by local authorities organisations. Grants are very, very important to do impact on areas where services are lightly used for community transport organisations. Obviously, they journeys into market towns, etcetera. Those services are a discretionary spend by a local authority and, tend to be better used by pensioners. Certainly in rural often, one of the first areas for cost reduction. We are areas, there has been an impact where the services that seeing a number of community transport organisations have been lost through expenditure cuts on tenders who are having their grants reduced or withdrawn. impact on services that pensioners generally use. Secondly, there seems to be a move by some local Beyond that, in the more urban areas, the services that authorities to a more competitive commissioning have been lost are Sundays and evenings, which have process of services—services that community probably less of an impact on the concessionary fare transport organisations previously provided through pass, but there is certainly an issue that the value of grant or service level agreement. While some the pass to pensioners has been reduced by the other community transport organisations have responded expenditure cuts, which have removed some of the well to that change, clearly, a different skill set and services that they would use. experience and ability is required if you are going Ben Colson: I concur with Mr Montgomery’s through that kind of tendering process. comments. I would just make one other point, if I The third area is that community transport is exposed may, as well. I operate buses in an area which includes to secondary financial pressures. We are seeing that an inbound holiday area, particularly for short-stay, restructuring, say, of the health and education services which is particularly useful, therefore, to older people in local areas has a knock-on impact to the community because the cost of staying is lower. Buses there are transport sector. But, also, if the funding of other being reduced and therefore it particularly impacts on community organisations that rely on community those people staying in the UK but going on holiday. transport has been squeezed, that, in turn, has an Mr Montgomery, in the answer to the previous impact on the sector. I suppose those three areas or question, mentioned Torquay, which is another area of three trends, if you like, are emerging from the review a similar nature. As a broad statement about rural so far. areas I concur, but there is also that particular situation as people go from urban areas on holiday to rural Q127 Chair: Could you give us some examples of areas as well. the sorts of reductions that are being made? What types of services are being withdrawn? Q130 Mr Leech: As operators, given the amount of Keith Halstead: I suppose it is a broad mix: money that is spent on a free bus pass service, do you Dial-a-Ride; demand responsive transport particularly; think that that money could be spent better in terms community car schemes is a good example. We have of improving services for people in general, including seen reductions in grant of, say, 50% in Malvern, and people who are eligible for the free pass? higher elsewhere. It is a mix across the 120 local Mike Cooper: Perhaps I could start but not answer the transport authorities and each is taking different particular question. I think we are into policy right approaches. now and I am not sure that that is our role. I think The community transport sector itself is very diverse politicians dictate policy. in terms of the nature and types of services delivered. For example, we have seen a massive reduction in Q131 Mr Leech: I am just asking for a view from the recent years in wheels to work schemes and mopeds operators, though. You are entitled to offer an opinion. that are often used by 16 to 18-year-olds to gain Chair: You are invited to offer an opinion. You don’t access to employment in rural areas. have to give it but you are invited to. Ben Colson: Mr Leech, I will offer an opinion then, Q128 Chair: Could you give us any examples of the if it is strictly on that basis. It is government policy places where those have been withdrawn? and it is for us to implement it. But, having said that, cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Transport Committee: Evidence Ev 23

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead

I look upon the income we get for reimbursement in benefit because of this fuel cost increase. It is affecting exactly the same way as I look upon the income we our costs big time. get from fare-paying passengers, and, indeed, where Also, the other point that we should make is that, in it is appropriate, from running contracts to run buses, those parts of the UK that are struggling with cuts to so I get a total income. I try and use that in my own local government spending, we know that there is a company to my best ability, to give everybody the strong correlation between softer parts of the UK best possible quality and standard of service I can. economically and unemployment and bus patronage. Therefore, in a way, to me it does not matter almost So there is an effect that we are feeling at that part which heading it comes under because it comes into as well. an income stream with which I then look to provide services. Q135 Chair: Does anybody else want to add Keith Halstead: I would say that it is a big issue as something? far as community transport is concerned, as we have Ben Colson: Mr Leech, in 2008 we managed to offset suggested to this Committee on previous occasions. some of the fuel cost increase by extra revenue from Most community transport organisations are not people transferring to bus. We have kept some of eligible to claim concessionary fares. It is obviously those people and we have an underlying upward trend at the discretion of local transport authorities, and, in fare payers, but we go into the current fuel cost particularly in the current climate, that is unlikely to increase on the basis that about 70% of our passengers come forward. We feel that every member of the do not pay. They are either students going to and from public is entitled to equality of access and that it is no college or school, paid for by the county on a pass, or use if you have your bus pass ready to use on public they are seniors and others on a free bus pass. transport but you can’t walk to a bus stop to access it. Therefore, this is exactly the point Mr Cotterell made. We feel that is a form of discrimination, if you like. We have a very small, narrow base in which we can We have long campaigned that either the concessionary bus travel scheme should be extended recover. Our attempt has always been not to recover to include, particularly, Dial-a-Ride services and through fares, although we might have to, but in fact section 19 services under the 1985 Road Transport to market and introduce new tickets and the like to try Act, or indeed it perhaps should be looked at to attract more passengers. We have introduced special completely afresh now, especially in the current reduced fares for all 16 to 19-year-olds, with no economic climate. worries about ID passes. For two adults travelling together there and back, we give 15% off. We have Q132 Mr Leech: Can I move on to the issue of fuel done a number of things to try to ameliorate the need prices? Mr Colson talked about fuel prices potentially for fares increases. We will carry on doing that increasing fares. Is there any evidence over the last because I would rather do that than increase fares, if few months, when there has been a big hike in fuel I can avoid it. prices, that it has had a knock-on impact of increased patronage, because, certainly the last time there was a Q136 Paul Maynard: It is very clear from the big hike in fuel prices, bus companies did quite well written evidence we have been receiving that, in terms out of it? specifically of the changes to the concessionary fares Roger Cotterell: I think the answer to that is yes, we scheme, PTEs and unitary authorities have marginally are seeing that. Just to give you an idea of the profile benefited from the change to the rules but shires have of our company, being on the south coast, which is an been disproportionately hit, with the consequence that area similar to Ben’s, there is an elderly population in shire areas we are seeing evening services and off and lots of holiday makers and all the rest of it. Our peak services gradually squeezed. Is this a new profile is that 66% of our passengers are development or are we seeing the acceleration of concessionary and only 34% are fare-paying. existing trends? Consequently, that is a very small target audience if Robert Montgomery: I said, in the earlier answer, that you are trying to focus your increase in fares. We the biggest impact on our services in terms of local estimate that, if we increase our fares by about 10%, authority expenditure cuts has predominantly been in that will merely cover another 3p per litre increase in the Midlands, shire counties, down towards the south, fuel prices. largely because there are quite significant tendered service budgets in those authorities and they have Q133 Chair: Is that the level that you are considering decided they can no longer afford them. increasing fares by? But there have also been impacts, certainly in our Roger Cotterell: Potentially, yes. case, in terms of concessionary reimbursement in major urban areas as well. Certainly our experience at Q134 Chair: By 10%. the moment—and we haven’t got agreement—is that Roger Cotterell: Yes, in April. That will cover 3p in one of the issues on the concessionary fares situation fuel prices, which doesn’t really claw back where we is that we have to deal separately with 64 authorities have been over the last year. across England. We only deal with one in Scotland Mike Cooper: I am not sure we can disaggregate and one in Wales, but we have to deal with 64 in patronage movements, increases or reductions in England. They are all taking a different approach to modal shift, because fuel prices are going up. I how they will reimburse concessionary fares and they wouldn’t want the Committee to walk away this are all different this year from what they were last morning believing that the bus industry is going to year. cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Ev 24 Transport Committee: Evidence

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead

The biggest issue isn’t so much the urban-rural divide. ages, it is 10p less. But that would have been It is the whole uncertainty of us as an operator not substantially worse had they just taken the amount of knowing what we are going to be paid next week for payment from DCLG and passported it through into the passengers we are going to carry in response to the scheme. government policy. In fact, it was only yesterday that I met a local authority and agreed a payment for Q139 Paul Maynard: Would you agree, therefore, concessionary fares movements in 2007–08, four that that decision-making process and that years after the event. consequence has a particularly major impact on the Government’s stated aim to increase domestic Q137 Paul Maynard: I understand your point. tourism, if holiday areas are being disproportionately Clearly, we have had evidence from the Association hit and the bus network is suffering? of Transport Co-ordinating Officers that PTEs and Ben Colson: I can only talk about my own area, Mr unitary authorities are getting more money in terms of Maynard. My situation is this. We have agreed with their reimbursement and the shires are getting less. Norfolk County Council what is loosely called a fixed You are clearly saying that, while councils may be pot scheme. When that money runs out, I will be getting additional money, they are not passing it on to getting zero pence for every pensioner I carry. the operators as they should do. Is that my correct Because of the increase in domestic tourism, I think understanding? there is every reason to believe that that fund, because Robert Montgomery: We are certainly not seeing that it is based on last year, will run out. I already have to clear split. put extra vehicles into my system to carry the overloads in March, which I have never known Q138 Paul Maynard: I am going to be raising that before. But, in fact, I fear that by the autumn I will with the Local Government Association when they actually be putting vehicles out using fuel and drivers’ will try to blame you, no doubt, in half an hour’s time. wages, and the scheme will provide me with zero Can I specifically ask Mr Colson from Norfolk Green pence income for doing so. this? I notice in your written evidence you referred to the concept of honeypot funding, and Mr Cotterell Q140 Paul Maynard: It was striking to read the raised it as well in terms of being an area with holiday contributions from the bus operators. There was a makers coming in. Could you just explain to me in great difference between the major operators like what way that was a problem and whether the recent Arriva and Stagecoach and the smaller operators as changes to the way in which concessionary fares and to, first, their views on the impact of BSOG. While your reimbursement are calculated have helped or you didn’t welcome it, you can see it is coming and made the situation worse? plan ahead for it. But, secondly, the submissions of Ben Colson: In 2006, when the mandatory free fares both Mr Cotterell and Mr Colson talked a lot about scheme or free scheme came in for local travel, a the regulatory burden. Could you give some examples calculating method was devised between DCLG and of how the regulatory burden could be diminished, local authorities. In 2008, when that was extended to Mr Cotterell, maybe? free national travel, it was recognised that there were Roger Cotterell: I would just like to react to what you going to be some areas—they are loosely called were saying about BSOG. The point about BSOG for honeypots—where there is going to be a surge in the us at the moment is that we have some key immediate amount of travel. No doubt the south coast will be issues, which are the local government funding and one; no doubt Torquay is one and so is North Norfolk. the concessionary funding, and BSOG is down the The Government at that point made a supplementary road. That is not to say it is not significant. It is to say payment and I think it was via a special grant, but, that it is second tier, if you like, because we have to forgive me, I am not totally au fait with the be able to maintain the business and keep it viable mechanisms of Government funding in that sense. But until April next year. I do not want to give the it was a top-up grant given specifically to those local impression that BSOG is okay. We just recognise in authority areas where there was seen to be this the current circumstances that everybody has to take honeypot effect. some of the pain and that includes us. Subsequent to that, in the new calculator, there is no provision for that. In an operators’ workshop held by Q141 Paul Maynard: But you are less apocalyptic the Department for Transport economists on 26 than the major bus operators? October last year, I specifically asked the question Roger Cotterell: I can’t speak for them. what the funding arrangement was for that type of area. I paraphrase, obviously, but they said, “None. Q142 Paul Maynard: What about in terms of the We have not taken account of it. We have not put it regulatory burden? into the system.” Roger Cotterell: There are issues about the I personally believe that is why an area like Norfolk regulatory burden. is suffering a massive hit in the amount of money it gets from central Government. What it has done, to Q143 Chair: What are the issues? its credit, in my opinion, is to take that hit from its Roger Cotterell: They are to do with time and effort. own budget, and we are getting a reduction. In fact, We are consumed by red tape, really. An example from 1 April, for every pensioner I carry, I am going would be an issue in Brighton and Hove. Recently, we to be getting 20p less. If you translate that across my were not advised that routes were up for tender and entire network of all passengers, no matter what their that had to do with an EEC regulation. We were cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Transport Committee: Evidence Ev 25

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead pre-advised it would disadvantage somebody else, because the only future was to get more people on to maybe anywhere across the EU. Without that buses rather than less. regulatory burden, we would have known about that Over the last seven years we have managed to achieve tender and been given the opportunity to go for it. growth of between 1%, 2% and 2.5% per annum in There are issues like that. Obviously, there are DDA passenger numbers, which is very hard fought. We regulations and all the issues that Ben Colson has have had to work very hard to do it. There has been a mentioned in his paper. lot of investment in new vehicles, research and marketing, but we have managed to do it. Q144 Iain Stewart: I would like, if I may, to pick up With regard to the situation in 2008, in the last fuel Mr Leech’s point about a potential increase in spike, we did see a very slight upward trend in passenger numbers as a result of the higher costs of passenger numbers, which initially was inexplicable, fuel at the moment. In the Arriva submission, you and then we realised it was because of fuel prices. But noted: “… we recognise that there is a low threshold you are talking in some areas about 0.5% and in other for fare increases above which increasingly large areas nothing. The same thing seems to be happening numbers of passengers choose not to use the bus.” at the moment. I think Mike is absolutely right; it is We are in an age where all travel is becoming more very hard to disaggregate. expensive by whatever mode. Particularly with the But, given the austerity and the recession we have larger operators, I would like to probe you a bit further been through, we have not seen the kind of passenger into what estimate you have made of the potential fall we would normally have seen in the past in that increase in numbers you can attract from people who environment. We are not sitting here with bucket loads would otherwise use their cars, to generate additional of new passengers, but we are seeing probably revenue. Then, on Mr Colson’s point, to what extent somewhere in the mix. We have some businesses that could you use that additional revenue to cross- are showing very light year on year growth in subsidise the socially necessary routes? passenger numbers, which is predominantly due to Mike Cooper: The Arriva estimate, in terms of the things like fuel prices and the efforts we are making. increase that we expect from this modal shift, is zero. But that is then offset by the mileage cuts on the We haven’t put an estimate in. Our budgets and our tendered service reductions and fares increases to forecasting are pretty sophisticated, I believe, but you compensate for concessionary fares. Therefore, there can’t quantify it. Certainly, compared to the effects are pluses and minuses. that we are seeing elsewhere in the industry, it is to There is something from fuel, but it is not big enough going to be negligible. to outweigh the combined effect of BSOG, It is interesting thus far that we have talked about concessionary fares reductions, tendered service cuts BSOG, concessions and supported services. The point and loss of jobs, because a lot of people travelling on we must take away from this morning is that it is our buses are going to work. We are very wary in death by a thousand cuts. You can’t just look at BSOG some areas, where there are significant employment or the others in isolation. It is the combined effect reductions, of what will that do to our revenues over a 12 to 15-month period that is really going to going forward. hit the industry. The benefits, if there are any, that we are going to get from modal shift because of the oil crisis are going to be negligible compared to that. Q147 Chair: Has that started to affect you now? Robert Montgomery: We have not seen a major effect Q145 Iain Stewart: I am a little puzzled by that. This yet. We have concerns in some areas, particularly is the second time we have had a spike in fuel costs where there are big lay-offs amongst public sector in recent years. Looking back on the situation two or workers, in urban areas, where there probably will be three years ago, when petrol was up in the £1.20 a reasonable levels of bus use and therefore there would litre zone, did you get no uplift in passenger numbers be travel to and from work reductions. at that time? The biggest issue we have now is the huge Mike Cooper: The industry, without exception, does uncertainty. There are so many things changing at not have large customer databases where you can once. We have some cost rises and reductions in attribute a new passenger, a new customer, to a funding, and we don’t even know whether some of particular reaction in the marketplace. We have tried our customers will have a job next week. The whole to build econometric models to understand and thing is very uncertain to predict and, as I say, that is disaggregate the effects of what is happening around made all the more complex by the fact that the biggest us in the economy and it is very, very difficult. So, single change we are looking at, at the moment, is no, we have not attributed X% increase in our changes to concessions. We do not know what we are patronage on that particular service at that particular going to be paid for carrying our concessionary time of day because of modal shift, because there are passengers next week in a number of authorities. so many other variables in the marketplace. Q148 Chair: So it is uncertainty. Q146 Iain Stewart: Can I ask the same question to Robert Montgomery: It is uncertainty. Stagecoach? Robert Montgomery: I said earlier that we decided Q149 Kwasi Kwarteng: Listening to your evidence, about 10 years ago that our future lay in modal shift someone who didn’t know about the industry might and organic growth. We started to put a lot more think that this is an entirely nationally owned, publicly emphasis in trying to attract new people on to buses controlled industry, which of course we realise it is cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Ev 26 Transport Committee: Evidence

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead not—80% of the services are commercially run. Yet authorities, not necessarily transport authorities but you speak about regulation and the cuts in the CSR. other tier local authorities, of the rightness of, for I was just wondering if you have identified, as example, taking a hit on their car parking revenues business people, what challenges as an industry you because it is the right thing to do to try and encourage face and the things that you can sort out yourselves. I people to use buses. It is that type of analogy. I feel am hearing all this stuff about the regulatory burden that we are making some progress on that. and the cuts in spending, but, if you look into We spend substantially more than the industry yourselves, what do you think you could do to make average, for example, on marketing and advertising as the industry better—things that you could actually well. If you come into our area, people get sick to control and improve? death of the fact that they are constantly hearing our Chair: With regard to improvements, what can the name on the local radio, but that is fine by me. We industry do? are doing all sorts of things slavishly to try and build Mike Cooper: There are two sides of the fence. One our customer base, because, ultimately, as Mr is what we can do within the business and the other Montgomery said, that has to be the right thing for the is what we can do in terms of attracting customers and business, as business people. potential customers as well. Within the business, we However, as business people, the one thing we don’t recognised way before the CSR was announced what like—and certainly perhaps it affects small businesses was going to happen because, hopefully, we are more than larger ones because you can team labour a sufficiently realistic to understand the state of public bit and you look at things in aggregate—is all the finances. So we have put in place a self-help constant uncertainty at the moment. BSOG 2012 is programme, which has looked to take costs out of the going to be 20% cut. We know that there has been an business and improve productivity. Our procurement agenda for some years—it goes back some years—on has improved. We have reduced overheads, which further reform of the style in which BSOG is paid out. unfortunately means redundancies. We have If it goes on to a per passenger basis—and I sat on the amalgamated depots. We have downsized depots in Department for Transport’s advisory group looking at Colville, Stafford, Durham and Peterlee. Within the that, back in 2009–10—that will have a substantial business, yes, we are business people and we try and negative impact on rural areas because obviously control what we can control. more people travel in urban areas. Then I ask myself the question whether I should be investing against Q150 Kwasi Kwarteng: Do you think you are doing that. It is the uncertainty at the moment which is the that effectively? What I want to get at is, how do you particularly difficult issue for us all to face. view yourselves? Do you think there is not much more that you need to be doing? Do you think you are on Q152 Chair: Would anybody else like to come in? the right track? Do you think that there are a lot of Robert Montgomery: As I have said, in the last 10 things that you could be doing that you aren’t doing? years we have put emphasis on growing passengers. How do you see yourselves? Let me put it very In the previous 10 years we put a huge amount of crudely. If you had to give yourself a score out of 10, emphasis on cutting costs. We set out to create an what would the mark be that you would give efficient business and then, once we had it, to try and yourselves? sell it. Mike Cooper: I think we are pretty tough on ourselves The other thing which we have done to try and help as an industry. It would probably be seven out of 10 ourselves, and help the industry in the last few years, and can do better. But external, independent market is that we have invested very, very heavily in new research says that 92% of our customers are happy vehicles. We have spent nearly £400 million on new with the service that we offer. So, in terms of the vehicles since 2006 and we invested completely external facing side, I think we are providing a good through the whole recessionary period. Regardless of service to existing customers. Internally, if you look what was happening in the economy, we decided the at, certainly, the Arriva cost base, it is being pared right thing to do was to continue to renew and down year on year on year on year. improve our fleet, and that is one of the reasons why we feel we are seeing people switching to bus. Q151 Chair: The question is: what can you do as an But we are doing that now in a situation where there industry to cut costs or promote different services? is a storm coming the other way, and, while we are Mr Colson, you look as if you want to come in. predominantly a commercial business, a significant Ben Colson: We have cut our overhead costs and, number of our customers—the elderly customers—are in particular, things like cleaning, so we don’t clean now effectively being paid for by Government in one vehicles as often. We make sure we try to keep on top form or another. What we are faced with now is the of it, but we don’t clean vehicles as often routinely. Government telling us that we must carry these people Am I proud of that? No, I am not at all, but we have free and, “By the way, we will tell you what we are been forced into that situation. We feel that people going to pay you for it as well.” So we don’t even set would rather have a bus that is slightly dirtier than not the prices for those to a large extent now. That has have a bus at all, to take an extreme example. given us a degree of uncertainty, and we have to deal What we have done for some years now—so it is not with that and we have to find a way through. just as a result of the current uncertainties—in a very deeply rural area, is to set about absolutely toughly trying to win new customers. Our whole emphasis is Q153 Kwasi Kwarteng: When you talk about the on that. I spend of lot of time trying to influence local uncertainty, there are two types of uncertainty. There cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Transport Committee: Evidence Ev 27

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead is obviously a market uncertainty in that we don’t others to say, “We are all involved in this. We need to know what the economy is going to be doing in six make it work in the tough financial conditions that months’ time, which everyone has to deal with; every are out there.” Community transport organisations can business has to deal with that. Then the uncertainty play their part and, hopefully, more so, feed into some that I think you are identifying is from the of the commercial services. But, often, they (the Government. Is that right? commercial services) are pretty uncertain as to their Robert Montgomery: Yes. viability if they don’t get the patronage. That is an area where we can particularly help. Q154 Kwasi Kwarteng: You are saying that they are not being clear enough about what they are thinking. Q157 Chair: How much of the gap could community Robert Montgomery: Yes. transport realistically fill? What kind of figure? Are we talking about 5% or 10%? Keith Halstead: I would have thought somewhere Q155 Chair: Mr Halstead, what can community between—certainly 10%. transport do? Chair: Something of that order. Keith Halstead: Two suggested improvements, Chair. Keith Halstead: 10% to 15%, somewhere in that area. 1 One is that I think there is an opportunity for the It is a hard one to call. greater development of community operated bus services, section 22 services, particularly in rural Q158 Paul Maynard: Just to remain with areas. There are only a very few of these around at community transport, could I ask specifically Mr the moment. We see great potential for more of those Cooper, Mr Colson and Mr Halstead to give me their in rural areas, and, indeed, we had our first one in own definition of what they think a socially necessary London the other day serving a housing estate that service is? I want to see whether it is the same then links into a traditional commercial bus route. interpretation across the industry as a whole. Mr We think in rural areas—and I have seen examples of Cooper, could I ask you first? this recently—that community bus services, in very Mike Cooper: A totally necessary service? deep rural areas particularly, could feed into Paul Maynard: No, socially necessary. commercial routes that are often operating in between Mike Cooper: Again, we are in policy territory, aren’t market towns. Our members, given the right kind of we, which is— help and support in the sector generally, could do more on that. Q159 Paul Maynard: So you don’t have a The other area, too, is community car schemes. We definition then? are seeing a growth of these. These are totally Mike Cooper: I understand that your constituents need volunteer based, people using their own cars to take bus services, and, when we take decisions to remove people to healthcare appointments and to hospitals. or increase the price of those services, we do not take The big barrier on that at the moment that links back that lightly. I don’t think it is my role to define what to some of the earlier points the Committee made a necessary bus service is, though. about fuel costs is that currently, volunteers can claim 40p per mile that is tax free by HMRC. But now, with Q160 Chair: Does anybody want to give a definition the increase in fuel costs, many are saying they can’t of a socially necessary service? afford to volunteer and it is a real barrier to Ben Colson: I will attempt one, by all means, if you volunteering. want. I agree entirely that it is not for us. This is a The way forward there, at no cost to the Chancellor policy matter and we react to policies, so long as there of Exchequer, is that, if you are an employer, you can is not a vacuum of policy, which is what our concern allow one of your employees, who takes an additional is at the moment. passenger with them on a business journey, to claim However, in a rural context, a village context, the very 45p per mile for car-sharing. We would like to see minimum is to get people to work, students to school that extended to community and social car schemes, or college, as the case may be, and people to a shop/ which we feel would make a huge improvement, health facility. It is not necessarily the main centre provide more opportunities and secure the future of with a great range of shops but to get the absolutely volunteering and community transport at no cost to basic foodstuffs that people need for their everyday the Government. life.

Q156 Chair: How far could community transport Q161 Paul Maynard: Thank you. That is a helpful replace local authority services that are being answer that unfortunately Mr Cooper could not give. withdrawn? But what I was trying to establish was whether, in Keith Halstead: There has been a lot of discussion your view, being socially necessary is not specifically about community transport filling the gap. When the a matter of targeting very marginal groups who may gap is referred to, it is the huge gap of reduction of have particular disabilities, say, but is a wider definition that includes those with a need to get to local authority funding. Community transport can’t do work, for example. It is not a very narrow definition, that and never would have the resources to do that. and that is how local councils should approach it. However, I do think we can fill a gap within that Ben Colson: I provide community transport services range, partly through the section 22 service provision under contract to Lincolnshire County Council for and other initiatives. It is through working with local authorities and, indeed, commercial operators and 1 See ev 166 cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Ev 28 Transport Committee: Evidence

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead vehicles. The service that they provide, and we simply services rather than using volunteers, that opens it up provide the vehicle and driver for it, does a whole more. range of things from 7 o’clock in the morning until 6 o’clock at night. It is not just for specific groups at Q165 Paul Maynard: I have read a lot in the written all, in an area which otherwise wouldn’t have submissions about the role of Traffic Commissioners conventional bus services. and I am a little unclear as to their role in transport policy. They seem to be rather akin to that of the tooth Q162 Paul Maynard: May I put this to Mr Halstead, fairy in oral hygiene. Is there any role for Traffic because that answers the question adequately now. I Commissioners in encouraging diversity of public note that your organisation is called the Community transport provision or community transport provision, Transport Association and not the Community Bus because what you have just said to me seems to be Association, which I think is an important difference. that the obstacle is a complicated system that people Why do you think it is that there is a predisposition find hard to navigate? The desire to provide it is out to look at filling this gap with, perhaps, bus services? there, but the ability to get to the provision stage isn’t. You have mentioned the possibility of community car If we have Traffic Commissioners, should they not be services. Taxi buses have been mentioned in previous doing something to encourage that diversity of inquiries. Trams, for example, don’t get community provision? and concessionary fare grants, for example. Why do Keith Halstead: I think they do. They are very you think the policy makers always seem to see bus supportive of our work and help and support us in the as the preferred model of providing community kind of information and free advice that we give to transport? organisations and community groups wishing to Keith Halstead: I suppose it is a generic term that deliver community transport. Obviously, they are tends to be used and probably one that is quite supported in that task by VOSA. They attend our historic. Certainly a lot of our members use vehicles various events and speak at different conferences with fewer than nine seats, MPVs and cars. I have about their role. They are very supportive, but it is already mentioned mopeds. We have seen accessible quite a big task to do. vehicles taking different shapes and forms. You could also bring into that community car clubs even. That is another form of community transport. Q166 Paul Maynard: Who, therefore, should be providing that extra assistance to navigate the system? I think the definition should be as wide as possible. What is important is that all those forms of transport Is there any statutory individual or body? give people the quality of life that they want. I would Keith Halstead: There are the local authorities. The put the emphasis, as well as on bus, on the word Department for Transport has recently reissued “community” because it is all about people at the end guidance to local authorities on community transport. of the day rather than transport and buses. We are available as a UK-wide organisation to provide help and support to anyone, wherever they are, free of charge. We have an advice line available every day. Q163 Paul Maynard: For the benefit of the record— this is a soft question for you—can you just explain to us why you think the concessionary fares scheme Q167 Paul Maynard: Would you agree that there should be extended to community transport? should be a named individual in each local authority Keith Halstead: As I said earlier, at the moment it who is a community transport officer that they can go discriminates against people who can only use to as a point of contact? community transport schemes. They are eligible for a Keith Halsted: I would say probably in this day and pass but they can’t use it. They can’t get to the bus age a “champion”. Whether that is a dedicated post or stop to use it because of mobility or access issues. I not is up to the local authority to decide, but certainly think it should be extended; otherwise it is a somebody who champions community transport postcode lottery. would be great.

Q164 Paul Maynard: Just as a factual question, you Q168 Iain Stewart: I would like to turn to the degree mentioned earlier there have been relatively few to which you consult with local communities by section 22 services. Can you just explain why that making changes to bus services, and I mean by that might be? What has the obstacle been towards them both the commercial ones and the supported ones. As being set up? an opening question, in the changes that you are Keith Halstead: Community transport, obviously, is planning, what discussions are you having, ﬁrst, with organised by a lot of voluntary and community local authorities and, secondly, with the broader groups. It is often local people coming together. They communities such as GPs’ surgeries, hospitals, have to understand the legislation, licensing, a whole colleges, etcetera? What degree of consultation are raft of things with which, obviously, the Community you making? Transport Association helps them. Robert Montgomery: If I can answer that, the bulk of But, then, if they have to move into registering a the changes we are making at the moment, as I public bus route and all that goes with that, they need explained earlier, is after tendered services. In effect, additional knowledge and information. A lot of the it is the local authority who have asked us to make the focus has been on more immediate needs and meeting change. To that degree, the local authority presumably the demands on a local level. Now, particularly that have engaged in consultation and asked us to change paid drivers can be involved in delivering section 22 the contract. cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Transport Committee: Evidence Ev 29

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead

Beyond that, we seek to try and get as much feedback Robert Montgomery: It is very much a local issue. from customers on an ongoing basis as possible. All Buses are very much a local business. We run our of our printed material and all of our buses carry business in such a way that our local operating contact details for customers to give us feedback and companies take the decisions that impact on their tell us what they think about what we are currently networks. You can’t do that nationwide or centrally. doing. When we set out to make any particularly We have seen some work from Passenger Focus in the significant changes, sometimes those changes are in last 12 months where their initial review of the bus response to customer feedback. I can think of a industry involved doing passenger satisfaction surveys number of examples recently where we have made across the UK. The interesting thing is the very high major changes to services as a direct result of scores that came out of those surveys. That was the customers saying they would like us to do things first involvement that Passenger Focus had in the bus differently. industry and they produced a series of passenger We generally will consult with any bus user groups satisfaction scores that were in the upper 80s and into that exist. Some areas have very strong bus user the 90s, which was quite encouraging to us, without groups and that is helpful to us because we have a any significant impact from that body. They simply focus as to how we can consult. We also routinely tested the temperature and came back and said consult with local authorities. Consultation is actually it was quite good. something that we are open to do because it means The other thing we have done, which is a little more we are more likely to get it right. It varies by area. modern and we are not too sure whether it will work Some areas are better equipped to respond to or not, is to begin to monitor social networking sites consultation than others. So we leave that very much for comments on bus services. I have described it as as a local decision and we do whatever is right in a being a bit like sitting in a pub and listening to other particular town, city or county. people’s conversations. It does tell us something Ben Colson: I operate in three shire local authority because you can test the temperature as to whether areas and in each case I discuss changes with them people think the bus services are good or not. It is a before the eight weeks, which is the minimum legally different way of doing things. We are not entirely sure required period. We were probably in discussion for whether it has a long-term future because we will end this most recent set of changes, as their budgets were up with a thick pile of paper with a whole series of also changing and becoming settled, probably as much random comments about buses, but you get a flavour as 12 or 13 weeks before. As Mr Montgomery says, from it. So all of those things work. if they are the ones that are making a change to their Ben Colson: I would be very much against a budget, then clearly they would then contact, for regulatory body or statutory body, as the case may be, for two reasons. First of all, it will enmesh us in example, the health centres and so on. bureaucracy and I don’t think that is in the customers’ How do I engage with ordinary customers of mine? I interests at all. do that by a variety of means. We encourage people Secondly, where there is good communication and to e-mail or write to us, as the case may be, and we good listening, there is a real possibility of it being get quite a number in a week. Certainly, at the levelled downwards. As Mr Montgomery said, buses moment, there is a surge as people are saying, “Why are incredibly localised, right down to the village or is my bus service being withdrawn or being pared maybe the sub-village level, and I think it should be back?” That is fine because I would be quite happy to well and truly left as it is. Maybe there should be best explain that. I go to parish council meetings; I talk to practice directions or guidance but certainly nothing people at bus stops. regulatory at all. But, above all else, the best way without doubt to find Mike Cooper: Our customer service departments and out, and I suspect my colleagues on my left in your post bag probably illustrate that fact. It is a pinch particular don’t do this, is that I drive my own buses point on a particular route at a particular time of day and I talk to people as they get on and off the bus. or a traffic light that is not working, and that is the That gives me a particular insight, which is not issue. You can’t have those sorts of discussions unique, but it is a pretty good insight into not what anywhere other than at a local level. makes—if I may dare use the phrase—the political class think but what the real users think and what their Q170 Kwasi Kwarteng: Forgive me for raking over concerns are. things that we touched on a few minutes ago, but I Keith Halstead: Community transport is obviously am very interested in your relationship with the local embedded in the communities it serves. It is run by authorities. Do you have a regular system, for trustees. All the services are designed by local people instance? Would you be seeing a representative of the to meet their needs. local authority every month or every week, and can you just describe in a short way the nature of your Q169 Iain Stewart: If I can ask as a follow-up, is it relationship with them and how you interface with a system best left to working at the local level on a them? voluntary code, through bus users groups? In my own Chair: Relationships with local authorities and the area of Milton Keynes, we have recently set up a bus transport authorities. users group which has vastly improved the Mike Cooper: We have taken time out over the last consultation process. Is it best left at that very local 18 months, following the Local Transport Act, and we level or is there a role for a broader regulation and have asked an independent researcher to go into our statutory consultation process? top 22 local authorities around the UK that represent cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Ev 30 Transport Committee: Evidence

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead about 85% of our business, to give us an utterly types and shapes. The best way to work is to be able dispassionate view of what they think of us. They fed to work on a long-term planning horizon, which is that back. Local Arriva management have not been back to this issue about certainty. If the local authority involved in that process at all. We did that at the start knows what money it has and what it can do, and we of 2010 and we are going back at the start of 2011 know what money we are going to be paid and what just to say, “What is the quality of the relationship and we can do, we can work very well with a local what are we doing together well, in terms of the authority. traction that we are getting together?” That has been What causes issues is sudden random changes of very illuminating, and reflected well on us even in policy or funding. In some cases, what has caused tough times, because I think we are being more most of the issues more recently has been the impact transparent and more open. Perhaps because of the of national Government policy on local authorities, Local Transport Act 2008 we see an improvement. and that has had an impact on local authorities. It is But this does illustrate an interesting point, doesn’t it? not so much the relationship with us. It has meant we The Local Transport Act back in 2008 said, rightly, have had to have some difficult discussions, but, if the that these relationships, these partnerships, are relationship is strong, we get through that. We believe absolutely critical for the industry. But what the very strongly in partnership. Government have done, through the localism agenda, is to push down very tough decisions to that local Q174 Kwasi Kwarteng: Let me get this straight. level, which is quite adversarial, so operators and What you are saying is that the Government’s local authorities have to get round tables and talk localism agenda is perhaps endangering the harmony about tough decisions. That is fighting with the of your relationship with local government. fundamental objectives of what the LTA was trying Mike Cooper: It is not “perhaps”. to achieve. Q175 Kwasi Kwarteng: “Is endangering”. Q171 Kwasi Kwarteng: Would you agree with that? Mike Cooper: There are occasions when it is, Robert Montgomery: I would agree with that. You absolutely. can’t actually run buses without working with the Robert Montgomery: This may be controversial to say local authority because they control the highway and but it depends what the localism agenda is. If what it they control the priorities. We communicate at all is doing is passing the difficult decisions down to local sorts of levels, sometimes very, very informally. The authorities so they have to cut the expenditure, then local authority public transport network planners and that is where it does the damage. It is not the localism our commercial managers will talk to each other of itself. Localism would work really well if the local almost on a daily basis. It is not so much a formal authorities had the money. Localism gets difficult if it consultation but, “We are going to have to do does not have the money. something about this, but I told you about that six months ago. It might be an issue.” That kind of thing Q176 Kwasi Kwarteng: But if you have a good happens all the time. That needs to happen. relationship with a local authority, then that should Mike’s comment is about some of the things being mean that the tougher decisions they have, the more pushed down to local authorities. We have had issues likely you are to reach a consensus. If you have a very on concessionary fares, for example, where the local good friend, you can go through the tough times. If it authority has the money it has, which might not be is someone you don’t know as well, then that is going enough. It has an obligation to provide free transport. to put more strain on the relationship. Surely that We have an obligation to provide the free transport, makes sense. and we need to be paid for it. We have found Ben Colson: I agree with that absolutely entirely. That ourselves beginning to fall out with local authorities, is why I totally favour partnerships rather than quality arguing over the sum of money that neither of us is contracts, for example, because a quality contract is getting any say over. That has not helped. enforced. A partnership is a real coming together between different people who are going to make the Q172 Chair: Would it be better to have more quality best of it. partnerships or quality contracts where you have Had we been in a quality contract situation, for formal agreements with the local authorities, with the example, in Norfolk—I hope we never are but had we transport authorities, on funding specific groups of been, say, in 2010—and with the funding cut we have services? Would that give better value to the public had now, that quality contract would have been driven and to the taxpayer? asunder. I would have made investments that I could Robert Montgomery: The biggest issue is partnership not then deliver on to get the money back from the and working together. The actual mechanism of— investment. I suspect relations would be soured, to say the very least. Q173 Chair: But wouldn’t it be better to have a more It is people working with people, delivering for formalised quality contract or quality partnership people, that actually counts, and that is not enforced where you have agreements with the local authorities by law or by legal agreements. It really doesn’t work on what services you are going to run and at what for me at all. level? Roger Cotterell: For us, it is a very rare day when we Robert Montgomery: We always try to work in are not talking to the local authority, but we are a partnership with the local authority. We have a small localised company working with one local number of quality partnership schemes of various authority. The relationship is very strong and we are cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Transport Committee: Evidence Ev 31

22 March 2011 Robert Montgomery, Mike Cooper, Roger Cotterell, Ben Colson and Keith Halstead working through the problems together. We haven’t Chair: Thank you very much, gentlemen, for coming fallen out, as was suggested at the other end of the and answering our questions. Thank you. table, just yet and we are not planning to. It works well, but we recognise they have a job to do and they recognise we have issues to address.

Examination of Witnesses

Witnesses: Councillor Peter Box CBE, Local Government Association, Tracey Jessop, Vice Chair, Association of Transport Co-ordinating Ofﬁcers, David Brown, Director General, South Yorkshire PTE, pteg, Richard Owens, Assistant Director (Integrated Passenger Transport), North Yorkshire County Council, and Bruce Thompson, Transport Co-ordination Service Manager, Devon County Council, gave evidence.

Q177 Chair: Good morning. Would you please the overall economy. We think overall—and there is identify yourselves with your name and the quite a lot of research that underpins that—every organisation you represent? pound spent in bus services is good value for money. Bruce Thompson: I am Bruce Thompson. I represent Devon County Council. Q180 Chair: What is the overall picture emerging on David Brown: I am David Brown from South the impacts of cuts on bus services? What kinds of Yorkshire PTE, representing pteg. changes and reductions are you seeing? Peter Box: I am Peter Box, Chair of the LGA’s Tracey Jessop: ATCO has recently done some Economy and Transport Board, and leader of research of English councils, and over 55% of the Wakefield Council. respondents suggested that they would be cutting Tracey Jessop: I am Tracey Jessop, Vice Chair of the funding for services in some way. It does vary, and it Association of Transport Co-ordinating Officers. varies very much because of the local policy decisions Richard Owens: I am Richard Owens, representing that are taken by members. But in some areas those North Yorkshire County Council. service changes will be quite significant because funding has been reduced by, for example, more than Q178 Chair: How important would you say bus 50% in the coming financial year. Others have chosen services are to the public and to local authorities? to protect the funding for local bus services in the Councillor Box, what is your view on that? How coming year, 2011–12, but have already signalled important are bus services? their intent that they will no longer be able to protect Peter Box: They are very important to people them into 2012–13. generally, but I think they mean different things to If there is a variation across the country, it is largely different areas of the country. For example, the area brought about by political, local decisions—what that I am from is a very urban area, whereas another members wish to do with policy. But, also, as you colleague is here today from North Yorkshire, which heard in the previous session, it is the combined is very rural. It depends where you live to a certain impacts of funding changes through the CSR, things extent and what your particular needs are. But there like BSOG and concessionary fares that are is no doubt at all that the consultation that we do with combining to have an impact across services. local people shows that people value public transport and I would say increasingly so. Q181 Chair: Councillor Box, what would you say is the general impact? What are you seeing? Are fare Q179 Chair: Do the public get good value for money increases proposed and services being withdrawn? from the funding invested in local transport, and local Could you give us any examples of the kinds of buses, specifically? Is it a good investment? cutbacks? David Brown: From a PTE point of view, we clearly Peter Box: As Tracey said, it will differ across think that buses do add value, significantly. They are different parts of the country as people try and deal a very flexible mechanism for moving people around with a very difficult budget situation, depending on for essential journeys to and from work or college. local need and local requirements. It is important to We believe that they are reasonably cost-effective and, stress that, of the total subsidy paid, 80% is paid not therefore, with regard to the value for money for every to local government. We are only responsible for 20%. pound spent on bus services, the UK economy gets a There is no doubt there will be an impact, but, at the good rate of return. end of the day, local authorities will have to make Also, as a method of transport and policy delivery, it very difficult decisions that will impact on services. achieves a number of things. There are the things that There is no escaping that in terms of the you were talking about in the previous session, about Comprehensive Spending Review. As always, we will the social benefit, about getting people to and from be accountable to the electorate in, I think, about six essential services, schools, hospital, shops, and getting weeks’ time, for those decisions. people to and from work. But, also, buses reduce vehicle emissions so they have a congestion benefit as Q182 Chair: I am seeking some examples of what well as an economic benefit, because, clearly, getting has either happened or is being planned. Mr Brown, people to and from work is a fundamental role for bus can you give us any examples of the kinds of changes services and people back into employment is good for being made or being contemplated? cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Ev 32 Transport Committee: Evidence

22 March 2011 Councillor Peter Box CBE, Tracey Jessop, David Brown, Richard Owens and Bruce Thompson

David Brown: To reiterate what previous speakers provided. 75% to 80% of the total network is on a have been saying, I think you are starting to see a commercial basis. We only support the very rural different level of picture emerging. There is clearly a services. We broke that down into rural services, separate picture which is clear in London about the interurban services and services where we are the level of funding and the level of service that is main provider in school services. I looked at the value provided here. of each of those to communities, and what we Across the PTEs in the next year, there is very little concluded was that we wanted to maintain access for reduction in the actual tendered service budgets. There as many people as possible during the daytime. We is a reduction in services that were funded by a rural decided we wanted to maintain daytime services, subsidy grant, so that will decline across PTE areas. which meant the things that we had to sacrifice were You will see some rural services in broader our evening and Sunday services. metropolitan areas disappear, but PTEs have identified that tendered services are the biggest policy tool that Q185 Chair: Mr Thompson, what can you tell us we have and therefore have protected those services about Devon? What is happening there? for the next year. But, as Tracey says, there will be Bruce Thompson: In Devon, we are cutting about challenges in subsequent years. 17% from the public transport budget, which is £1.35 To meet budget reductions, other things that support million, from next month. We have tried to be quite bus services will be reduced. We are already seeing a pragmatic in terms of what we are cutting. For reduction in the amount of money we spend on capital instance, we recognise that the 24/7 culture means that schemes and on bus priority measures. We will be a lot more people who are working use the evening closing some travel information lines so people won’t and Sunday services as well. be able to get information about bus services. We will We looked at different types of services to look at be reducing the level of customer service and their worth, and, as a result, we are cutting bus cleaning. All those are supporting the bus service but services which are operating for non-entitled school are not necessarily a direct policy intervention. children where we felt that quite a few of those in You will also see discretionary concessionary fares urban areas would be replaced by commercial change in value. In South Yorkshire, we currently services, albeit at much higher fares. Actually, that has charge 40p for young people to travel on the bus. That happened, so I think that was quite a relative success will go up by 10p in each of the subsequent three in that regard. We have also cut some deep rural years, and I know that other PTEs are doing the same. leisure services operating in the summer only, Supporting measures in PTE areas are likely to be particularly in the Dartmoor area. either charged for or reduced, whereas tendered Rather than cut evenings and Sundays, or rather than services are being protected. But, as Tracey said, cut the highest cost per passenger services, which outside PTE areas, we are seeing actual service levels would have had a disproportionate effect on the deep also reducing over the next three years. You end up rural areas, we have tried to thin out services by with almost a three-tier approach to how the service looking at perhaps operating fewer services, whether will develop over the forthcoming years. on bus services or in fare cars, which are like taxi bus services, to make sure that communities still have a Q183 Chair: Mr Owens, what can you tell us about bus. As a result, there is no community, apart from North Yorkshire? one in north Devon, where they no longer have any Richard Owens: In North Yorkshire, from next service. That one in north Devon was a fare car month, we will reduce expenditure by £600,000, scheme where only about 60 to 70 people used it in which is about 10% of the amount by which we the last year at a cost of over £30 per passenger support bus services. We have achieved that by journey. With that one exception, every community withdrawing funding for evening and Sunday services, still has a bus, but they do have fewer buses in some I would say across the county, but it falls mainly on cases. the east coast and in Selby. We have no additional plans to make further reductions at this stage, but we Q186 Kwasi Kwarteng: I just wanted to pick up on will be monitoring the situation as we go forward. some remarks made by the Transport Minister We also know that that action has triggered some Norman Baker, who accused councils of having a minor changes to commercial services simply because knee-jerk reaction, simply reacting in a very of a loss of income. But we are also conscious of a unconsidered way to cuts in funding. I just wanted to perfect financial storm in a way, through BSOG and have on record what your thoughts were about that concessionary fares amalgamating together. We want accusation. to make sure that we are not making reductions, Richard Owens: We started considering our position chasing further reductions, and chasing further 12 months ago once we spotted trouble on the reductions. We want to take a structured approach as horizon, as it were, so it wasn’t a knee-jerk reaction. we go forward. We had a careful consideration of what our options were, ready to put in place. We had a consultation Q184 Chair: How did you come to the decisions you programme planned and we would have had the arrived at on which services to withdraw? Did you ability to change that if we wanted to. have any kind of consultation first? Tracey Jessop: I would make the point that, in terms Richard Owens: We looked at the range of services of transport planning, it is a mixture of a commercial that we provide. Most of our network in North network, and the local authority’s role is to determine Yorkshire, despite being very rural, is commercially how much money they want to invest and then add to cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Transport Committee: Evidence Ev 33

22 March 2011 Councillor Peter Box CBE, Tracey Jessop, David Brown, Richard Owens and Bruce Thompson that commercial network that exists. You have to do Q188 Kwasi Kwarteng: Sure. Let’s leave the phrase that and, obviously, to do that, you need to understand and let’s say that you were forced to react in a way. the commercial market. The commercial market is a Peter Box: If you look at every local authority over business and therefore reacts, and can react under the last two or three years, we have tried to be as regulation with a minimum of 56 days’ notice to the efficient as we can. Tremendous savings have been local authority. That does not lend itself to a good made in individual authorities and I can give you length of consultation, either with current users or, examples. The fact is, though, that because of the indeed, potential users of services. That is quite a amount of reduction, which is about 28% or 29% difficult position to be in from a local authority’s point across the board in terms of local authority spend, that of view. has created a different set of problems. With a position of shrinking budgets, the question You can plan. Colleagues have explained how they isn’t whether we can now step in and replace services have planned in different ways, in different that may no longer be commercial or need to be authorities. Every authority has been doing that. But, replaced. It is a question of how much money we have when you are faced with a 28% or 29% cut in your and where we wish to target it. It is no longer a funding, it really does mean you have to work very, question of authorities just stepping in and increasing very quickly, and without the luxury of having time a level of subsidy to continue to provide a level of to restructure how services can be delivered in support. It is actually about making much more different ways. I wouldn’t say it is a knee-jerk focused decisions on the value of journeys and, to reaction, but it has meant that we have had to work some extent, having to make local decisions based on very, very quickly indeed. those parameters. Peter Box: I don’t agree that there has been a Q189 Chair: Is the problem only one cut or is it the knee-jerk reaction in the way that has been described. combination of changes? I think local government over the last few years has Peter Box: It is the overall cut of 28% or 29% in shown itself very adept at consulting in different spending that has caused the problem. Different ways, and, again, it depends on the local authority authorities have different problems, obviously. Some involved. have had an area-based grants cut, which was paid to For me, the key issue has been that we have had to those more deprived neighbourhoods, like my own work at very short notice, this year in particular, when area, for example. It has been different across the the final supplement was announced in December. The country. But it is the speed at which we have to make LGA has been lobbying very hard in terms of the front cuts this year of such a large amount that has caused loading. That has meant that local government has not particular problems. In a perfect world, I guess we really had the time to start restructuring in the ways would have liked to have had more time to be more that local services could possibly be delivered considered, but we have had to work quickly this differently. That has been a real problem. year—quicker than normal. Having said that, I do think that there has been David Brown: I agree with what colleagues are consultation in individual authorities and the decisions saying. We were all planning for a range of that have been taken have been taken allowing for eventualities. There is quite a lot of scenario planning. that consultation. We don’t simply make decisions in I know in PTEs, and mine in particular, last summer isolation, and you can see from the submission that we we were in discussions with the local members about made that there are different examples of how local the impact of any changes so that we were fully aware authorities have consulted with the electorate, of what the impact would be on communities or depending on individual circumstances. At the end of individuals of any changes that we were due to make. the day, localism will mean that different authorities That is then determined on the actual quantum of the have a different set of priorities and there will be a money that is available. Clearly, as Councillor Box difference in terms of service delivery between says, the size of the changes for local authorities then authorities. The LGA has always argued for making impacted on what PTEs could agree their budgets sure that there is the widest possible consultation, and would be. we shall continue to do that. The big uncertainty for us was the change in the way that concessionary fares were funded. Previously we Q187 Kwasi Kwarteng: What you have said has not would get a special grant directly to ITAs, which gave really contradicted what Norman Baker was us clarity of the affordability of the scheme or not. suggesting, in that you have all admitted that there Now, because that is being cycled through to local was a very short time frame in terms of how you had authorities, that caused a delay for us in understanding to react to the news about the funding. But, at the the full level of our budget because we then had to same time, I have not got that much comfort that there have discussions with all of our individual local was much planning. You suggested that you could see authorities on the amount that would be passported the way in which the wind was blowing 12 months through. For PTEs, that was a specific issue that meant ago, which makes sense, and that you had some sort we could not finalise our budget until the very last of planning or you took some sort of care to work out minute because of the certainty or uncertainty of that where you would be as a result of the cuts, whereas direct grant. If that were reinstated, that would give you are saying that you had very little time to respond us and, I think we heard earlier, the operators greater to this. certainty of their budgets moving forward. Peter Box: I think the phrase “knee-jerk reaction” is Tracey Jessop: I was just going to come back on the unfortunate because it has connotations. point about the knee-jerk reaction. I think local cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

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22 March 2011 Councillor Peter Box CBE, Tracey Jessop, David Brown, Richard Owens and Bruce Thompson authorities have been planning for some time because distribution within a particular area and that guidance we have all been warmed up to the idea that, through does not necessarily seem to be as robust as it might CSR, in broad terms we are looking at a 25%-ish, be. maybe 30%, reduction. At local levels, people have been warmed up to that from at least last summer. Q192 Mr Leech: Is this a geographical issue or is it Certainly, in my own experience in my own local an operator issue, where there is one particular major authority, those discussions with transport operators operator who has been less helpful in terms of began last year, thinking about, “Okay, how can we negotiations with local authorities? jointly take out about 25% funding from the network, Tracey Jessop: I would not suggest that there is an and how can we work together so that we provide the operator issue at all across the country—not that I am maximum number of journey possibilities?” That is aware of from the ATCO perspective. on one level. Mr Leech: So it is a geographical issue. Then, of course, you have the CSR announcement, and, as David just alluded to, you know what is Q193 Chair: Mr Brown, do you want to comment coming. But then you get the additional hit and a on this? substantial change to concessionary fares, for David Brown: The relationships have changed since example. That is when you then realise that, because the Local Transport Act came in in 2008, so there is of the change in distribution, in my own authority, a much greater willingness to work in partnership. which is Norfolk, there will be an additional £3 That is an evolving situation. Now is the time for what million reduction in funding which you could not have I would call proper hard-edged partnerships, as planned for because you didn’t know it was coming. opposed to just people generally getting on with each It has an incredible impact when you have that level, other, because when there is less money that is when 38% less funding, coming from one transport stream, real partnership comes to the fore. We believe that particularly when all the special grants and all the pooling the resources that are available for all parties ring-fencing disappears. To be frank, Government can and then identifying the most appropriate network in then hide behind the idea, “It’s a local agenda. You the spend is the most appropriate way forward, but can, therefore, determine how you are going to spend that means that operators need to look at affordability, it”. It then comes down again to local member value for money of their services and the total decisions about what they consider to be important in network. That is the thing that needs to happen now. their own areas. That is where you have the conflict There are good examples of partnership working in for competing priorities. isolated areas, predominantly rural areas or bespoke towns and cities. Q190 Chair: Mr Thompson, do you want to add to If you look at the figures for the Department for that or disagree with anything? Transport in metropolitan areas, bus travel is still Bruce Thompson: I would just like to add to that a declining at a rate of knots and it is about time that little bit. The other aspect about this concept of the we had very crunchy, meaningful partnerships knee-jerk reaction is that, in the wider field, local covering wider areas so that we can drive patronage authorities inevitably had to start to look at what was up and protect the services that are there. statutory in terms of delivery, and, unfortunately, Peter Box: Just to follow on from David, I agree with public transport is not as statutory as many other what he has said. In a strange way, the CSR has services. When you take out the statutory services like strengthened partnerships. Over the last few years, social care, education, even repairing roads—and local government’s role has changed in any event in there is a great underfunding of roads partly because terms of partnership working through local strategic of the winters we have had recently—there is very partnerships and now through local enterprise little left for the less statutory elements, and therefore partnerships. I believe that people, in fact, are coming the cuts are not a reflection of the fact that the council closer in terms of joint working and looking at doesn’t value public transport. It is to do with the different solutions to a new set of problems. I actually maths of what is left when you have undertaken your think it has become stronger. statutory responsibilities. Q194 Mr Leech: That all sounds good news, but has Q191 Mr Leech: What impact has the CSR had on there been any temptation from local authorities to the relationship between local authorities and the bus look at ways of trying to protect services by going operators? down the quality contract routes, which are almost Tracey Jessop: From the ATCO perspective, certainly then going to be opposed by operators but anecdotally, the evidence that we have had from might help to protect certain services? across England is that, generally, because of the good David Brown: Our belief is that the work that a relationships that exist on network planning and the number of metropolitan areas and PTEs have done like, the relationships have survived the CSR. But it on quality contracts has created the environment for is fair to say that in some areas relationships are more meaningful partnerships. I don’t think those tense than they have been previously. The conversations would have happened without the concessionary fare settlement, in particular, has also legislation being put in place, and we are very keen meant that some of those relationships, through that that is retained or strengthened in any further negotiation, have become much more strained because policy review. we have had guidance from DfT about a formulaic I believe, listening to some of the earlier witnesses approach to settling a concessionary fares pot or in the earlier session, that they were putting quite an cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

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22 March 2011 Councillor Peter Box CBE, Tracey Jessop, David Brown, Richard Owens and Bruce Thompson eloquent argument for quality contracts about Richard Owens: Our consultation was on the single certainty of funding and understanding roles and option, which was to reduce funding for evening and responsibilities on each side. That sounded like a Sunday services. We did that over a 12-week period, quality contract, for me. That might be the best answer using local papers, our own newspaper, parish in certain circumstances. councils, district councils and area committees. A We need to move on in the partnerships to meaningful, whole raft of written and verbal consultation took hard-edged partnerships rather than people just place. agreeing with each other, because we need to have proper conversations. Putting fares up by 6% to 8% Q198 Paul Maynard: Clearly, there was also will drive people away from bus services and discussion about the amount of time you had to make therefore that can’t be in the general partnership these decisions and it is not entirely clear. Some of objectives. Understanding and tempering some of you were saying you had to work quickly; others said those commercial aspirations alongside the you were able to see it coming. If you had had more partnership ones are crucial, but quality contracts are time, do you think you might have been able to put to a fallback and an opportunity for people to use them the people of North Yorkshire a wider range of if that is the most appropriate way in their area. potential service alterations, all of which might have generated the desired savings? Why did you only put Q195 Mr Leech: Would you accept then that there one recommendation forward? is, potentially, a temptation for local authorities to go Richard Owens: The difficulty in putting a range of down that quality contract route in order to protect options is that bus services are very parochial. If you services? give people an option to take off a bus service in David Brown: I think there is an opportunity. The Skipton as opposed to a bus service in Scarborough, work that we have done has identified that you can people in Scarborough will vote to cut the service in probably get a better set of outputs for the total Skipton and vice versa. amount of money going into the system in a geographical area. There are risks and costs associated Q199 Chair: So localism won’t work there. to that, and Government, in the past, has been neither Richard Owens: Absolutely. It is quite difficult to get here nor there on whether it supports the approach of a consensus on that basis. quality contracts. A further push on that, I think, would encourage local authorities to look at Q200 Paul Maynard: Surely, what Passenger Focus preserving and then allowing the development of is trying to achieve across bus consultations, in services through a quality contract. general, is a higher quality of passenger input. Why was it so impossible to structure a consultation that was county-wide to assess differing priorities? Was it Q196 Chair: Councillor Box, how do you see that? merely that you didn’t want to be bothered? Are there going to be more quality contracts or Richard Owens: We had some experience of doing it quality partnerships? county-wide. In 2005, I think, we did a county-wide Peter Box: To expand that, if I can, Chair, as I consultation across a range of options, which was the mentioned earlier, only 20% of the subsidy is dealt last time we reduced funding. The results were just with by local authorities; 80% is by the operators inconclusive for the reasons I have said. People in directly. the areas concerned did not want their services to be The LGA’s position is clear. We believe there should affected, but nobody is prepared to give you an be a single pot and we believe that, at a time when alternative as to what to do. So we ended up with an finances are difficult, that would bring about some inconclusive consultation at that time. savings in any event. We believe that would be the Peter Box: You can’t look at transport in isolation, case. We also believe that we are accountable for the obviously. When all authorities make decisions, it is 20% for which we are responsible in a way perhaps within a wider context of services provided. We found that the operators are not. It would bring greater in my own authority, when we consulted, that there transparency as well and it would mean that the were issues that were more important to local people services provided are more local but are more relevant than transport, quite frankly. That is always the to different areas. difficulty.

Q197 Paul Maynard: I would like to return to the Q201 Chair: What are those issues? issue of consultation, particularly with regard to North Peter Box: By and large, services for vulnerable Yorkshire. I have listened carefully to all you have people and services to young people. They came over said and read your submissions. It is very clear that as, overwhelmingly, the key issues that people raised. everybody is always very keen to talk about how they We used a whole variety of different consultation have consulted, but the nature of that consultation is models, as Richard did in North Yorkshire. All often less clear. With regard to North Yorkshire, authorities tried to do as wide a variety of consultation clearly you had to make a large amount of ﬁnancial as they could. But, as I say, you can’t look at transport reductions in your bus spending and you claim that simply in isolation. It is part of a bigger picture in you consulted on this. Were you putting forward one terms of services and spending decisions. option to members of the public or was it a range of options that would get you to your required ﬁnancial Q202 Paul Maynard: Accepting what you have just destination? said, none the less, there are models of consultation cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

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22 March 2011 Councillor Peter Box CBE, Tracey Jessop, David Brown, Richard Owens and Bruce Thompson out there such as Citizens’ Jury, where you have to Tracey Jessop: I think there are two things. I will take difficult decisions across any given area, you can come back and answer your specific question, but encompass a wide range of views and enable local what I would have hoped is that the health authority, people to come to decisions. But, moving on from in determining that they were going to move the GP’s that, anyway, can I address Mr Brown perhaps? Do surgery, would have undertaken some accessibility you accept the figures from ATCO showing that PTEs planning in the first place to recognise that, by shifting and unitary authorities will be getting slightly more it, they were going to cause a transport problem and income from the concessionary fares scheme than therefore additional cost that they could avoid. previously? We have experience within Norfolk of sitting down David Brown: The PTE group worked very hard in and working with the PCTs to identify the best spots demonstrating the amount of money that was required for the surgeries to relocate to so that it reduces the and received previously through the special grant to transport need. If you do that in the planning process, cover the cost to it of the concessionary fares. We you can take out a lot of unnecessary transport were aware that the reimbursement mechanism, and provision and therefore save cost and cut carbon as therefore the allocation of funding, is somewhat of a well. black box to us. I think the PTEs, on the whole, are pleased with the outcome from that, but there is now Q205 Chair: How often does that happen? the additional hurdle that we then have to have Tracey Jessop: I can give you four examples within discussions with all of our district colleagues at the past 18 months in Norfolk specifically, looking at district councils to ensure that that is passported movements of GPs’ surgeries, literally picking them through, whereas previously it was identified as a up and putting them somewhere else for growth. single special grant. That adds an additional complication and a risk of that money not being Q206 Chair: Is that because you have a formal passed through. consultation on that or an agreement that there will be a consultation? Q203 Paul Maynard: Operators are indicating to us Tracey Jessop: That is because we have a good that you are not passing on this extra income to them. relationship with our colleagues in health, but it has Do you accept that accusation or how would you taken an awful long time to get that level of rebut it? engagement and discussion going at the very early David Brown: There is a slight confusion in their planning stages. But it has helped. terminology. They are talking about whether the In terms of the wider consultation, to come back to money that goes into district councils ends up getting your point as well, if I may, we mustn’t forget that we passported through to the operators through have local transport plans and we are now concessionary fares. To use South Yorkshire as an approaching the third local transport plan. They have example, we have made clear the requirement for a huge amount of consultation behind them, and we have, for the last 11 or 12 years, been consulting with funding the concessionary fares scheme in South people who live in our areas about what they would Yorkshire. We have identified where that funding is in like to see as our main transport objectives and how district councils’ budgets, and that has been they would like us to implement the overall policies. passported through the requirement that we had. That We have consulted on what our public transport is slightly less than the councils will have received strategies should be for the last 12 years or so. Often, from central Government, but we have a full that manifests itself in this sort of response, “If you allocation to ensure that our concessionary fares live in this size of community then you can expect to scheme with all of our operators is fully funded within receive this level of bus service provision.” If you our budget and that they are satisfied with that. In my have a population, say, of 2,000 people living in a example, no, I don’t accept the accusation. They have village, that may only mean one service a day, but it willingly signed up to what will be three-year deals, is an understanding that you then have that which gives them certainty and is adequate relationship with your community. reimbursement for what they carry through. I am not Subsequent to this, we have an extra layer, which is aware of it being a significant issue elsewhere. that we have a local transport plan based on the premise of this stream of funding and that has now Q204 Iain Stewart: Can I ask now the main question completely changed. We need to have additional I wanted to ask and a little supplementary on consultation based on what we can now provide. consultation? To what extent, as local authority Certainly, there is very good practice across all local representatives, will you proactively engage with the authorities, in their transport co-ordination units and wider community in adjusting bus services? I will the public transport units, that they regularly review give you one very local example. A big GP’s surgery services with operators to try to make sure that they in my constituency has relocated from being on a can maximise the money that they spend. These main bus route to being a reasonable distance away networks are not established and left. They are from it. I have been fighting a losing battle to get a continually reviewed and tweaked, so, where they minor adjustment to the route to accommodate that. It aren’t meeting their main revenue to cost ratio and is incredibly frustrating that neither the authority nor they are not affordable, they are changed. the bus company seems to be willing to accommodate Peter Box: It is a good question that Mr Stewart raises that. Is that an exception or will you try to consult about consultation because it takes place at different with broader service providers in the community? levels. At a strategic level, we talk with our partners cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

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22 March 2011 Councillor Peter Box CBE, Tracey Jessop, David Brown, Richard Owens and Bruce Thompson in the public sector, the PCT, and the police. But you Obviously, with partnerships, etcetera, there are ways are right to highlight that very local kind of of having some flow back, but I don’t think you would consultation that takes place as well, and it does. I can ever have as much flow as you need to cross-subsidise speak obviously, in particular, for my own authority in the way to which you are referring. and we do that at a very, very local level. All elected David Brown: It is slightly different in the members, whether Members of Parliament or local metropolitan areas. We have had partnerships with councillors, do advice surgeries. Mine happens to be single operators, FirstGroup in Sheffield, where we very near a bus stop. If there are any changes that have collectively designed a network, agreed broadly affect people, all I have to do is to walk five yards how ticketing would work in that area and stabilised and they will come and tell me what they think about it for a period of time. The operator has then agreed the change if they are not happy. The point is well to maintain its commercial network. We have made about making sure that we develop systems so maintained the tendered network. Concessionary fares that very specific issues can be taken on board and fed have been confirmed and their fares have been fixed into the system. for a year. We reversed a minus 5% decline into plus 2% to 3% in that area. It is not a difficult proposition. Q207 Iain Stewart: The other question I wanted to It is giving people stability and clarity, but that only ask follows on from the point Tracey Jessop was worked because we took the tendered service and the making about the local transport plans. We have commercial service and made one network for the talked a lot about the negatives that are coming in people of Sheffield, because, in essence, they are not terms of uncertainty of funding and cuts in funding. bothered about whether it is a tendered service or a But to what extent as local authorities do you see an commercial service. They want to see a bus network. opportunity for increasing bus patronage? At one level I believe that you can do that in designing and funding we have Norman Baker saying there is an enormous a total network. sum available through the Local Sustainable Transport I think your point about the local transport plan is Fund for projects to encourage, and it can encourage, valid. There is much greater linkage now to land use bus use. With the rise in fuel costs, bus travel will be planning at a macro level, in understanding how increasingly comparatively cheaper than private motor partners will develop land use planning. One of the usage. What role do you see local authorities having big challenges is that there is an assumption in in generating additional passenger journeys? Departments outside Transport, such as Health, Bruce Thompson: In Devon, we have had passenger Education, BIS, etcetera, that bus services will be growth in the last six or seven years, which has been there. Bus services will get people to hospital, health mainly on the more inter-urban and urban services. facilities, colleges, schools, and to work. But, if those There is, in simplistic terms, a very great difference bus services are declining because of funding between deep rural services where it is very difficult restraints from the Department for Transport, that will to get growth, where there probably tend to be undermine policies which are basically about choice. declining trends and where you tend not to be People are having a choice of where to go to be anywhere near commercial sustainability on the one educated and where to go to be made better. hand, and the more marginal supported services or With regard to your example of the GP’s surgery, if commercial services where you have potential for we are not careful, that will become more widespread growth. We have seen a real split in Devon with that. as more micro facilities are designed that don’t take We see that growth is probably likely to carry on in on board how people actually get there. I think that is the inter-urban and urban services. They are the a risk. services that people are most likely to use in larger numbers to go to work in places like Exeter and over There is an opportunity with the cost of fuel at the the border into Torquay, Plymouth and places like moment and it is now time for the operators to step that. In the deep rural areas, I see a great difficulty in up to the mark because their competitor, the car, is getting growth and also getting sustainability, because struggling because of the cost. Now is the time for they are so far away from promoting sustainability them to be putting in place decent offers for people to that they will always need a relatively high level of attract them on to the bus. support as well. That is where the challenge is. Q209 Kwasi Kwarteng: I wanted to ask a question Q208 Iain Stewart: Do you think that growth in the about consultation but from a slightly different angle. number of commercial routes will in any way be able I think Mr Thompson suggested at an earlier date that to cross-subsidise the less sustainable routes? sometimes there is not enough time to have Bruce Thompson: The legislative framework within consultation. If that is the case—let’s say you are in a which we work is one specifically designed to stop situation where you don’t have time to consult cross-subsidising from profitable routes to less widely—how do you implement cuts? What sort of profitable routes by going to tender on a route by route criteria do you have in trying to design a programme basis rather than the more general area of support we of cutting services? What are your benchmarks? How had before the 1985 Transport Act. That is quite a are you directed in this? difficult one to do. In other words, in simplistic terms, Chair: How do you actually implement where there are highly profitable routes, the legislation programming? requires or allows the commercial operator to pocket Kwasi Kwarteng: How do you work it out? If you that profit, and we have to end up supporting the haven’t got time to consult people, how do you unprofitable routes. It is quite difficult to achieve that. proceed? cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

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22 March 2011 Councillor Peter Box CBE, Tracey Jessop, David Brown, Richard Owens and Bruce Thompson

Richard Owens: It would depend on the extent of the Kwasi Kwarteng: Priorities within priorities. cuts and financially how much you were looking at in Peter Box: Indeed; of course. a particular year. Year on year we normally have a Kwasi Kwarteng: Okay. small contingency which buys back services on an Peter Box: There have to be, because, if you say that emergency basis, which buys us a little bit of time. It the most vulnerable are the biggest priority in a is Government-funded. It is unlikely that we would be particular neighbourhood, that does not necessarily hit with something so big that we couldn’t cope with mean that transport will get no funding at all. it in the short term. We calculated that it takes something like six months to conclude a consultation Q212 Chair: You have mentioned a couple of times and implement the changes. By the time you have a now that transport is only one thing and there are 12-week consultation, you have given the operators wider considerations. Are you really meaning to say notice on contracts and there is time for decision that transport is not seen as such high priority? making—it is six months end to end. If we start now, Peter Box: No. Transport is a high priority but clearly we will be able to make changes in December. Set within the context of overall spend. If you were to ask against that, operators can change services at eight local people, “Which do you think is the most weeks’ notice, but they normally do that in discussion important, for example, care for vulnerable people or with us and it tends to be incremental rather than transport?”, it is a tough judgment call. People to fundamental. whom I have spoken think that we should concentrate on trying to protect the most vulnerable. Q210 Kwasi Kwarteng: But my question is about the process. I am not interested in terms of the month Q213 Chair: Suppose you put it to people that but just in terms of a method. Are there any rules of getting the necessary transport to get people to work thumb that you have when you decide that these are is important. Would you get a different response to the services we can provide and, given the cuts in that specific question? funding, we have to limit those services? Are there Peter Box: Maybe, but we can always pose those any principles that you have in terms of determining kinds of questions in terms of our budgets in different that? ways. We are having to deal with a very, very difficult Richard Owens: We have priorities for different types situation as best we can, based on talking to local of services around journeys to work, journeys for people and consultation and, at the end of the day, shopping, evenings and Sundays, and we knew, trying to make a decision that we feel is best for through our bus strategy that we developed in our local people. local transport plan, that we accorded a low priority to evening and Sunday services. We can refer to that. Q214 Paul Maynard: I am sure even vulnerable We have performance standards in terms of passenger people need transport, but maybe that is another journeys and the number of people using a particular matter entirely. Can I aim my question at Mr journey. We can refer to all those as part of our Thompson, who has come all the way from Devon to decision-making process, and that is what we did see us? I was very interested to read your evidence when we made our last reductions. about your concept of area integration whereby you Peter Box: In terms of time, there has been seek to bring together all the publicly funded transport consultation. The point that we have been making is you provide as a council to try and look at how it can that, given the depth of the savings required, it would be rationalised. Yet you state in your evidence that it have been preferable, clearly, to have more time to did not seem to provide the amount of savings you talk to people. But, in terms of the specific question, expected. Could you explain why that might be and every authority sets its priorities. To give an example, how you think other councils might perform compared in my own authority, it is trying to protect as many of to that? the most vulnerable people as you can. You start on Bruce Thompson: If I just explain the background, that basis and look at every service that is provided. Devon was one of the first rural authorities to have a It is time-consuming. Elected members take the job fully integrated transport unit back in 1986. Since then very seriously in terms of looking at budgets and we have been developing our approach continually. trying to come to a view about what matters most to Last year, we embarked on this project of area local people, and, as I said at the beginning, bearing integration to look at an area based around a county in mind that at the end of the day we will be town, to see whether a different mix of transport could accountable in about six weeks’ time for those be put together, such as school transport, public decisions that we have taken. Of course, transport is transport, adult social care transport, fare cars which only part of that. I know that we are concerned about are like taxi buses, ring-and-ride services for frail, transport today, but, if I can just repeat the point, we elderly and disabled people, and wheelchair transport. need to make sure that from a local authority Very quickly, we found that we had to look at different perspective it is seen as making decisions across a far options. The school transport, even in deep rural areas, wider spectrum of local government services. tends to be operated with 53-seater coaches, commonly larger vehicles, and fairly large bulk Q211 Kwasi Kwarteng: It is interesting because you movements. Therefore, that does not lend itself to were suggesting that the priority was for commuters those vehicles then being used for demand responsive, and people getting to work, and you were suggesting more locally based off peak transport. that the priority was for the vulnerable people. We took that to one side, and we then found also that, Peter Box: There are priorities within priorities, sorry. in terms of the public transport, some of the public cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG02 Source: /MILES/PKU/INPUT/012933/012933_o002_th_110322 - Buses OE2 - Corrected draft.xml

Transport Committee: Evidence Ev 39

22 March 2011 Councillor Peter Box CBE, Tracey Jessop, David Brown, Richard Owens and Bruce Thompson transport, of course, is done relatively cheaply in the passenger of demand responsive transport is quite off peak on the basis that that vehicle is fully utilised often relatively high even compared with underused and is carrying reasonable numbers of people in the bus services. There is not a continuum from busy peak. We were then left with a slightly scaled-down services to less busy services, to infrequent services, version of area integration, which was the potential to to demand responsive transport. The cost goes up merge adult social care, the ring-and-ride services and quite often when you get to demand responsive demand responsive taxi bus fare car services. That is transport. where we got. There are some very successful demand responsive In the context of Devon, whereby we are spending transport schemes which have a fairly low cost per about £7.75 million on public transport support at the passenger. There are quite a large number where it moment, for the deep rural services, which have the goes the other way, where demand responsive potential for this kind of integration, there is only transport is more costly. What it does do is to provide about £1 million worth. In other words, even if we an area of ground for a linear bus route, but the cost could halve the cost of our deep rural services, we per passenger is often but not always more expensive. would only be saving about £500,000 out of an almost That is one of the challenges we have—looking at £8 million budget. We have to look at it in context alternative solutions. and that is what I was trying to get at. I am sorry that it has taken a bit of time to explain but that is that. Q218 Chair: The Government have announced two initiatives: the Community Transport Fund, with more Q215 Paul Maynard: If you had not started so early support for community transport, and the Local and been a pioneer in this field, if you were, say, North Sustainable Transport Fund. Are those funds going to Yorkshire, do you think it might deliver more savings make any significant difference in meeting the gaps if other councils were to embark on a similar move, created by the spending cuts? Does anybody think or do you think they would encounter the same they are going to make a major difference? They will problems you did, even though they are starting much make some difference. It is whether they will be able later on in the process? to make any significant difference. Bruce Thompson: You mean this area integration David Brown: Just specifically on services that are concept? being withdrawn or taken away because of budget Paul Maynard: Yes. cuts, we have been told very explicitly that the new Bruce Thompson: I don’t think the fact we started a fund is not there to continue funding things that have long time ago matters, but I was just explaining how been taken away due to budget reductions. I think it we got to that thought process, because there are is there for new and innovative ideas to come forward, different types of integration. and promoting bus or taxi bus within it. But my understanding is that we have been told explicitly that Q216 Paul Maynard: It is often proposed as a you cannot use it to carry on funding something that solution, yet clearly in your case it has not generated you have taken out and withdrawn. the savings that it might have done, and you are trying Chair: So it is something different but not— to test whether it is a sensible policy suggestion. David Brown: Complementary. Bruce Thompson: There are savings there, but they Peter Box: The budget fund has been taken from local are fairly limited. That is what I am saying. government in any event. So I suppose we feel Paul Maynard: Can I ask one final question? somewhat aggrieved, shall we say, that we could have Chair: A final one. had this money. But, at a time when we are talking about savings and being more efficient, this is simply Q217 Paul Maynard: Thank you. I have a personal yet another two examples of different streams of obsession with taxi buses and I noted from your funding. I come back to the point about our argument evidence that you were sceptical over their value. Do as the LGA, creating a single pot in terms of funding you think that was a unique situation to Devon as well to get far better efficiencies and to deliver a better or could it be replicated elsewhere? transport system over the medium to long term. Bruce Thompson: I am not sceptical about the value. Chair: Thank you very much for coming and I am sceptical about the value for money. The cost per answering our questions. cobber Pack: U PL: COE1 [SE] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Ev 40 Transport Committee: Evidence

Tuesday 3 May 2011

Members present: Mrs Louise Ellman (Chair)

Kwasi Kwarteng Iain Stewart ______

Examination of Witnesses

Witnesses: Ray Wilkes, Bus user (West Yorkshire), Victoria Harvey, Bus user (Milton Keynes/Leighton Buzzard), Terry Kirby, Bus user (Leicester), and David Redgewell, Bus user (Somerset), gave evidence.

Q219 Chair: Good afternoon and welcome to the to struggle. So the bus company could quite Transport Select Committee. Could I ask you, please, successfully say that, if there were any trafﬁc if you would just give your names for our records? I proposals which would undermine bus services, the will start at the end. local economy would risk losing up to £10,000 per Ray Wilkes: Ray Wilkes. day. That was actually accepted. David Redgewell: David Redgewell. Victoria Harvey: Victoria Harvey. Q221 Chair: Thank you. Would anybody else like to Terry Kirby: Terry Kirby. add to that? Victoria Harvey: Yes. I suffer from ME—chronic Q220 Chair: Thank you very much. Not all of our fatigue syndrome—so frequently I cannot walk very members are here this afternoon. Some are on other far. Without the bus, I would probably have to look parliamentary business, on Bill Committees, and for some form of assisted living or I would not be others are on constituency business, but they will all able to survive by myself when I am ill. I see a lot of be studying the results of this afternoon’s evidence very elderly people and, literally, the only thing they session. I thank all of you very much for coming to can manage to do is to walk from the front door to the Transport Committee today. the bus. When you are ill and living on a small budget, All of you use buses. Could you tell us how important you become aware of the vulnerability of so many you think local buses are and perhaps indicate where people who depend on the bus to get back and forth you think changes to those bus services might be from hospital. They don’t know other people who can coming—things that have either happened or you give them lifts and the bus is crucial. It is also crucial know have been planned? Who would like to start for beating congestion, from which Dunstable suffers us off? hugely. On the LSP, the cost to business was moaned Terry Kirby: Shall I start? I am Terry Kirby from about the whole time. You see it in Leighton Buzzard. Leicestershire. You asked how important local buses We have one developer bus service that is beating are. They are absolutely crucial. They are crucial not congestion; it has created a 20% modal shift. But the just to many local people—to the people who use tragedy is that there is no funding for that to be them—but they are also crucial to local society. They repeated anywhere else. are also crucial to local businesses, the local tourist David Redgewell: Can I give you a south-west of economy and the whole of society in general. Bus England perspective? We have just started to see the journeys comprise 70% of the entire public transport effects of the cuts in Somerset. The effects of usage, basically. 70% of public transport usage is on Somerset County Council’s cuts have been the bus. At present we have a network which is widespread because they affect the counties of Dorset, reasonably intensive and which covers most areas of Bath & North East Somerset, North Somerset and into the UK, but of course it is now under threat as never the Greater Bristol area. Somerset has basically before. withdrawn most of its evening services. People use buses in my experience—and I know a lot I will give you some examples of college students of people who use buses in urban and rural areas— who are studying in Bristol, who reside in the Mendip not just to get to work but to get to school, to the region, near the city of Wells and Shepton Mallet. doctors, to visit their elderly parents, to do shopping Shepton Mallet is a town of about 10,000. It used to and so on and so forth. Some of these proposals will have a bus service via Wells to Bristol and Bath until undermine their ability to do any—and in some cases 11 o’clock at night. The last bus from Wells to all—of those things. Shepton Mallet is now at 5 minutes to 6 in the It will not just be the local community that suffers but evening. If you are working in Bristol or Bath, there the local business community will suffer. Several is no access to jobs and employment. We have lost years ago my local bus company did a survey in the evening services between Wells and Bristol and Hinckley town centre and they found that their bus Bath, and Cheddar does not have an evening service passengers spent £5 per average in Hinckley town at all now. So you have a major tourist attraction in centre when they brought the passengers in. By doing the UK without access by bus service after 6 o’clock that, they managed to work out that it brought 2,000 at night. passengers into that town centre every day, and a With regard to Taunton, the main county town, there is simple equation indicated that their buses brought in no evening service between Taunton, Wellington and £10,000 to that local economy every working day, on Bridgwater. These are sizeable places. Taunton has average. That local economy was already beginning nearly 60,000 people, Wellington has about 20,000, cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Transport Committee: Evidence Ev 41

3 May 2011 Ray Wilkes, Victoria Harvey, Terry Kirby and David Redgewell and Bridgwater, again, has getting on for about what can you tell us about the importance of bus 20,000. The only link between Taunton and Bristol services and losses that there may be? now is the railway line and the very overcrowded Ray Wilkes: I live in West Yorkshire and travel a lot Great Western trains, with a lack of train seats. A lot in North Yorkshire because my hobby is hiking. In of the county has no bus network. West Yorkshire, we have very severe congestion. There have been big protests in Bath. There has been About half the people on the buses have cars. They the 6–7 Campaign around the suburbs of Larkhall and could switch back to cars as the bus service has got some of the socially excluded parts of the city around worse, and it is getting worse because of congestion. Snowhill where they lost their Circle bus. That was But, of course, as they switch back, it makes the restored by Moir Lockhead, the then Chief Executive congestion worse and the congestion is hitting the of FirstGroup, but they wanted to buy additional whole of the West Yorkshire economy. frequency every 30 minutes. The money that was In North Yorkshire, there have been cuts to rural going to be used for the 6–7 Campaign for the local services which carry a lot of people from West bus services in Bath—and Bath is a pretty proactive Yorkshire to go walking and do other touristy things. council when it comes to buses—has been used We spend a lot of money when we are out doing because Bath and North East Somerset has basically leisure things in North Yorkshire. So there are spent money propping up the Somerset services down thousands of people going into North Yorkshire by to Wells and effectively from Bristol. Bristol City bus. They are not going to be able to because of cuts, Council is paying for buses into Somerset 21 miles and this is going to hit rural businesses quite hard. from its boundary, so things are not very good. They (businesses) are aware of that fact and they are Yeovil, which is a big military town with a naval air supporting the various campaigns to get more buses. station, had a night bus service. That finished last We are getting commercial services, which are quite good in West Yorkshire, being destroyed by night. It has two buses on a Sunday now, one paid by congestion and official indifference. Dorset from Bridport into Yeovil. There are no links to the railway station. So you get to a major city Q223 Chair: railway station three miles out of town between Exeter Mr Redgewell told us that there has not been any consultation on this. Have any of you had and Waterloo, which no longer has a feeder service. any consultation on this? Across the south-west it has become extremely Terry Kirby: Leicestershire is promising consultation difficult to maintain buses. Dorset have said they later this year. certainly would not follow Somerset’s views. The Greater Bristol authorities, who spent huge amounts Q224 Chair: But there has not been any up to now. of money on buses, spent £70 million of Government Terry Kirby: No, not yet. I also represent East grants on the Greater Bristol Bus Network, which is Midlands and Northamptonshire. Northamptonshire fantastic, with 120 brand new vehicles with First, have chopped all their support for bus services with stationed at depots like Wells, upgrading the network, effect from today, in effect, and there has been providing realtime information, bus lanes and priority virtually no consultation at all. measures. That is a programme which is rolling under the coalition Government now but is stopping at the Q225 Chair: Ms Harvey, are you aware of any Somerset border, which is absolutely crazy. There is consultation? Wells, Glastonbury and Street. The 60,000 population Victoria Harvey: Our consultation has been on two of Shepton Mallet is no longer going to have the weekdays. One of them was inaccessible unless you benefit of that network because Somerset have could get a lift and the invites only went out to people basically decided they are not going to continue to from community groups. The problem is there had support public bus services other than they do now. been consultations in the past, but what do you tell Unfortunately, there has been no consultation with people when they say, “We want better bus services,” users of services, and it is not just about the lame, the and the response has to be, “There is even less money poor and the sick. Mrs Thatcher had an idea that you than there was before”? were a failure in society if you were over 24 and used the bus. I think Sir George Young then came along Q226 Chair: Mr Wilkes, has there been any and had a totally different idea of society. consultation of which you are aware? In Devon, Cornwall and Somerset, over the last Ray Wilkes: North Yorkshire did a very good weekends, with no public holiday services running in consultation in terms of open input. We were invited many parts of the region, First Great Western have to put our views and lots of people did. There was a had to arrange taxiing people to places like consistent message coming from the consultees which Glastonbury and Street from rail heads. We no longer was totally ignored. West Yorkshire, consultation by have a late night bus on a Friday or Saturday for the Metro, tend to be steered by the question so they get tourists up to Bude from Exeter St Davids. I can say, the answer they want. however, that FirstGroup Management Services, both bus and rail, have rallied round to move people, but I Q227 Chair: So you do not feel it was very think there is a huge issue about the county council’s meaningful. role. Devon— Ray Wilkes: No.

Q222 Chair: Could I perhaps stop you for a minute? Q228 Iain Stewart: I am aware that the Competition We will be coming back to these points. Mr Wilkes, Commission are currently conducting an inquiry into cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Ev 42 Transport Committee: Evidence

3 May 2011 Ray Wilkes, Victoria Harvey, Terry Kirby and David Redgewell the regulation of bus services, and I understand parts two operators on the same route, because we have not of that has been a consultation process on whether got it. they wish to introduce network changes. As individual users or the passenger groups you represent, have you Q230 Iain Stewart: If I can just follow up on that, had any input into that? this is an additional question I would like to ask Terry Kirby: Yes. We are beginning to, partly because everyone. Where you have services that need to run of my own personal experience. On my own local across different local government areas—Ms Harvey, route from Leicester to Hinckley and Nuneaton, there you are Leighton Buzzard, which obviously has close are two companies that do not exactly compete with links to Milton Keynes and to Aylesbury Vale—in each other but do not exactly co-operate either: Arriva your view, is there sufficient co-operation between and Stagecoach. Arriva run half hourly in the daytime; different authorities in the routes that are supported? Stagecoach run every 20 minutes. You frequently get Victoria Harvey: Not at all, in an answer. One of the two buses running together, which is 40 miles there main problems now is that, due to council cuts, you and back, and there is no co-operation between them. are getting massive cuts in officers. Officer time is at It has taken 18 months to go through the Competition a massive premium as well as Arriva’s time. Arriva’s Commission to get them to agree to a joint weekly shortage of managers is so great that, if you run out ticket which would be valid on the other company’s of bus timetables on a bus, it nearly causes a whole buses, but you cannot use it on any of Arriva or crisis trying to get the bus timetables delivered to that Stagecoach’s other buses. Then there is a 28-day bus. They are so short-staffed at a high level it is equivalent which Stagecoach do, apparently, but unbelievable and it is the same in local authorities. Arriva will not accept. So you have all these different It is an odd situation because Central Bedfordshire things coming about, and there is no co-operation or and Milton Keynes are two different worlds and they co-ordination between them. just do not get on. There is a huge amount of rivalry, Our Leicestershire group—Campaign For Better Buckinghamshire and Milton Keynes hate each other. Transport—is trying to get Leicestershire County In between that, you occasionally get some poor Council to look at promoting bus corridors which will well-meaning officers speaking to each other, but I cover the Hinckley Road area and the Hinckley area had to personally threaten direct action to get display of Leicestershire, which would be able to get properly cases up in Leighton Buzzard so that we could get co-ordinated services which would deal with this type the Buckinghamshire timetables put up there for the of thing at source. Most of the people I speak to, and Buckinghamshire buses that brought people in from I speak to a lot of people, are not particularly bothered the villages to Leighton Buzzard, because, basically, if, for example, Stagecoach reduce their service to there was not the revenue funding. This is the legacy every half hour so that they get a bus every 15 from the last Government. There has been no money minutes. They do not mind losing a journey. for revenue for putting up bus timetables. The sustainable travel towns have shown that you Q229 Iain Stewart: You are happy that you have had need to have revenue money. When you don’t have it, the opportunity to feed all these points in. Is that the it is a disaster. Milton Keynes has appalling public same for the other members? transport information because there is so little revenue Terry Kirby: It has been very higgledy-piggledy. funding. With regard to Central Bedfordshire, I am all There has been a form of opportunity, but it has been for putting my own money in, and I am on benefits, very higgledy-piggledy. There is no proper to print out timetables to stick them up on bus co-ordination about it and it certainly needs to be displays. It is that bad on the ground. Then we have looked at in more detail. cuts on top of it. David Redgewell: In South West England, in Terry Kirby: It is no better in Leicester, let me Somerset, there is no competition to speak of. In assure you. Bristol, there is no “on road” competition. Obviously Ray Wilkes: Bus companies are really afraid to the West of England Partnership and the City of co-operate with each other to benefit the passenger Bristol are doing quite a major consultation on their because they live in fear of the Competition bus, rail and ferry services across the four unitary Commission. I think they are a completely unhelpful authorities. But, as far as competition is concerned, body for bus users. I would like to see them abolished there is a little bit of competition around Barnstaple as far as buses go because they do not understand and Ilfracombe in North Devon in the daytime and a the market at all. Every so-called monopoly area is a tiny bit around Plymouth and Torquay. Where there contestable market and there are also taxis, walking was competition between First and Go-Ahead in and cycling. The bus companies are under pressure Plymouth, that evaporated after six weeks, and, from all those modes, but they are not allowed to co- effectively, Plymouth has no evening or Sunday operate for passengers. services. There are just two commercial operators that I won’t say we have bullied them, but we have talked run. If there is no subsidy in there and no tender, we to various consumer organisations such as CBT and do not get the services. I am not sure what the the DalesBus organisation, the Yorkshire Dales Public Competition Commission can do, apart from saying Transport Users Group. We managed to get some sort they regulate the industry. We have a whole area from of consultation between West Yorkshire and North Cheltenham to Penzance where, apart from very tiny Yorkshire, but it took us years, partly because Metro amounts of corridors, no bus runs against another. thinks it knows best and all the other places are like What we are trying to hang on to in South West colonies. The other thing is that they just haven’t England is a bus network, not the luxury of having enough staff partly to go very far. cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Transport Committee: Evidence Ev 43

3 May 2011 Ray Wilkes, Victoria Harvey, Terry Kirby and David Redgewell

David Redgewell: In the south-west, the jam in the Q232 Chair: So one of the areas of your concern is sandwich was the South West Regional Development the funding of people to look at the planning of Agency. They held together a lot of the transport services and to promote them. co-ordination, along with, obviously, the South West Victoria Harvey: Yes, to market them. Leaders’ Board and South West Councils. They only Chair: Mr Wilkes, you had a very nice phrase in your exist now as very small bodies and the RDA is going. written evidence. You said you saw “promoting bus In the Bristol area, we have the West of England services to Mondeo man” as a solution. There are Partnership, which is also part of the Local Enterprise interesting things going on there. Partnership. They are taking on the bigger role of co-ordinating bus and rail services and ferries with Q233 Kwasi Kwarteng: I am very interested to Wiltshire, Swindon, Gloucestershire and Somerset, know how things have changed on the ground over but it is a new role for them and they are finding their the last year. Have you seen any real movement in feet. But, certainly with regard to the Somerset cuts, terms of bus fares on the buses? the Bristol and Bath authorities had a big say in David Redgewell: There have been two things preventing the cuts being as deep as they could have happening in the south-west. First of all, FirstGroup been. commercialised services in order to maintain as much I think there is a lack of guidance from central regional presence as it could. That came from Tim Government, from the coalition, on exactly how to go O’Toole, the Chief Executive, and that was a good about cross-boundary co-operation, and maybe we move. The other thing he did was to experiment with need to reinvent some of the things the DfT did well Giles Fearnley in reducing the fares. So we have had in terms of guidance notes and issues like that. some drop in fares in the whole of the area to try and Certainly, we have problems with local authorities in attract more people on to buses. We have just gone that there is a shortage of staff to put up bus through a period of cheap offers across the region. timetables. But FirstGroup, as a south-west Scottish The other thing, generally, is that, as the council company, do pride themselves, along with Stagecoach, subsidies have come out, then fares have also gone up in providing passenger information across the region, because, once you have taken the subsidy out, you as does Go-Ahead and Western Greyhound operating have to raise about £160,000 to run the vehicle a down in Cornwall. So we do have information. year—that is about £160,000 a bus. So it is £320,000 just to have some more modern kit in Devon, Q231 Iain Stewart: Can I just follow up on that? Cornwall, Somerset and Bristol. The Government have announced the Local Fares are going up, and that is a real problem for the Sustainable Transport Fund, which I understand is West of England Partnership, which has been trying designed to address problems like this. Have you seen to regulate fares between Bath and Wells, through any evidence in the bids that local authorities have put Radstock and Midsomer Norton. They are trying to forward under that scheme that this is a problem they cap fares to get more people on to those bus corridors, are addressing, if not right now but in the future? and that is very difficult with the movement in bus Victoria Harvey: It is a brilliant fund and we operator grants being reduced by 5% a year, with no completely support it. It has taken up a huge amount ring-fencing for bus subsidies. If there had been of officer time to put in for, so that is a huge cost out guidance on bus subsidy ring-fencing, and you take of the local authority. The problem with it is that not 20% in line with the cross-party councils up here, we every authority is concentrating on buses by any might have maintained a better bus network. The point stretch of the imagination. Milton Keynes is is that at the moment people are getting to rail stations concentrating on cycling. and their bus connection is not there. The second thing is that it is not designed to make up The other issue is travel cards and the issues to do for the cuts or to do the crucial thing, which is with that. There is no doubt Bristol needs an kick-start funding. To get a good bus service up and integrated transport authority to cover a 50-mile range running and popular, you have to fund it to the tune of Bristol and Bath. That is desperately needed and of £100,000 a year. The new service to the south of has been recommended by the previous Government Leighton Buzzard is incredibly popular and is now and the coalition. The problem with that is that we carrying 50,000 people a year, but we have to just have not got it. But we need to keep fares low. In subsidise it to the tune of £100,000 per year for five Bristol and Somerset we need to lower fares and we years. That, in congestion benefits, is huge, but the need to market more people on to buses. problem is that there is this gap. The new fund is not filling the gap. If only there were simple, ring-fenced Q234 Kwasi Kwarteng: But what has actually funding, like kick-start funding, and marketing, happened? You have described to me what you think because the problem is no one can afford marketing should happen, but what has happened over the last people. You have to be an anorak to deal with bus year? services; you have to be. But the person who uses the David Redgewell: A mixture of both. First have come bus lives in the real world. You have to have in and commercialised some services, done a fair bit somebody who can market it and sell it, and that is of marketing and spent a lot of time across Devon, where Brighton and Aylesbury and Stagecoach in Fife Cornwall, Somerset and Dorset, trying to get people have been brilliantly successful. I just pray for some back on to buses with cheaper fares and cheaper simple, ring-fenced funding that will be quick and offers. They have tried that experiment for the last two easy to apply for, with a few hoops to jump through. or three weeks. But, in the commercial world, where cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Ev 44 Transport Committee: Evidence

3 May 2011 Ray Wilkes, Victoria Harvey, Terry Kirby and David Redgewell they have kept services, obviously the fares have been With regard to return fares, Arriva Midlands do not slightly increased. now do returns. They have scrapped day return fares. But they are looking at the market. As the market They are trying to get people to buy their daily and moves, there is more commercialisation. I have been weekly tickets. Other operators still do. When they told this morning that this is probably going to go on do day returns, they have increased the return rates until October. October is the big issue in our part of proportionate to that, but again they have tended to the world. Will these bus services survive into the keep their weekly and monthly season tickets on a winter months without any Government grant for the broader path. local authority? That is our biggest fear. That is how the south-west works. We have a lift in the summer Q236 Chair: Thank you. I think the picture is and a down drop in the winter. emerging very clearly. Mr Kirby and Mr Wilkes, I think that both of you use concessionary fares passes. Q235 Kwasi Kwarteng: Let us get to the nub of Could you tell us how important that is and how you what I am trying to get to. If there have been fare would react to any changes in the amount you could increases, on what sort of scale and what sort of perhaps use those passes or how you would react to percentages have we seen in the last year? If fares are anyone wanting to charge you for having the passes? going up, what is the typical bus fare now? Is it £1.20? Mr Wilkes, can you tell us how you see it? David Redgewell: It is not £1.20 in Greater Bristol. It Ray Wilkes: I think at my income level I would have is £1 for three stops in the Bristol area. It is £4 for a just paid the fares without grumbling, but obviously it day ride around the city and it is £6 for Sunday. It is like getting a birthday present if somebody says you crosses Somerset. They have gone up an average of have got free travel, especially with the amount we between 20p and 50p per journey. travel. I have said in evidence that we are better off Ray Wilkes: The fares basket goes up with bus cost by at least £2,000 a year because of the free travel. inflation, which is different from ordinary inflation. There are quite a lot of pensioners that can afford to Individual fares will go in zones, and so certain pay and they all say, “We would rather pay than lose individual fares will often go up by quite big our services.” Two thirds of the people on our percentages. It might only be 10p or 20p, but it might rambling club coach are retired people who can travel be a big percentage, whereas the annual cards tend to free on the buses, and they pay £10 or £12 every go up very slowly and are very good value. Sunday to come out on the rambling club coach. It is Where we live, Metro continually condemn the bus one of these things where, if anybody says, “Do you companies for these bus fares that go up by a big want free fares?”, you would say yes, but nobody has percentage. They ignore the good value tickets and it thought about all the implications and what people makes it very hard for the bus companies to get people really would do if they understood all the choices. on board. Getting people on the buses is what keeps the fares down. If they cannot do that because the Q237 Chair: Mr Kirby, could you tell us how local politicians are against them, then they just keep important the concessionary pass is to you and people going up. you know? Terry Kirby: Can I just add this? We have had a Terry Kirby: A number of senior citizens have said to situation in Leicestershire, in particular, whereby me that they would not mind paying half fare, or 50p some of the main bus operators, principally Arriva and or £1, or something like that, if it would help to First, have tried to mask their real terms fare increases guarantee keeping the bus services going. I have said by putting on their website and in other publicity a to them, “Legally, there is nothing to prevent you statement which says, “Even greater reductions for paying the full fare if you want to do so. You do not weekly and monthly season ticket holders”. When you have to use the pass when you get on the bus.” I have read the small print under it, it actually says that they have retained the weekly and monthly ticket rates at told them, if they want to keep the bus services going basically the same rates as before. They have not that much, for every other trip they make they could reduced them on most of them—once or twice they pay the full fare and then every other trip they could have—but they have put the cost of the basic adult travel free. That is one way round that. I have said, if single fare up by something like 10p or 20p. They they want to keep the bus services going, that is one have done this several times over the last few years way they could do it. I personally would be quite and they have put a spin on it which says that regular happy to pay something like a 50p concessionary fare, travellers save even more, which masks the increase whatever it may be. I would not mind doing that. I of the basic adult single fare. When they have done think most people I speak to— that, the average single fare has gone up by about 10p or 20p. Q238 Chair: But how important is it that the pass I think the cheapest local fare now in Leicester City exists? from one stop to the next is probably £1.30. To go Terry Kirby: It is crucial, absolutely. It makes a from Leicester to Leicester Forest East, which is four difference between the number of journeys I could or five miles, it is about £2 single. To go up from there make and I probably could not make because of to Earl Shilton, which is another five or 10 miles, it is personal circumstances in some ways. Some of the only about another 20p. It is about £2.40. But the people I speak to can afford to pay and choose not to basic single fares for journeys of about three or four do so, but I think for most of the people I speak to it miles are now nearly £2 single, and these have been probably makes a substantial difference to the quality going up constantly over the last few years. of their lives. cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Transport Committee: Evidence Ev 45

3 May 2011 Ray Wilkes, Victoria Harvey, Terry Kirby and David Redgewell

Q239 Iain Stewart: There has been some debate and David Redgewell: Yes, but I think there should be publicity in the media about the off-peak nature of the some guidance. What we are seeing from the coalition concessionary passes. The national guidelines state is a lack of guidance. Lord Adonis and his buses you should not use it before 9.30 am, but local Minister issued lots of guidance. It was only guidance; authorities have a discretion. Do you think that is the it was not mandatory. But what we would like to see right balance, or is the fact that there is a 9.30 am from the buses Minister is more guidance from the cut-off causing problems? Department to local authorities on how to go about Ray Wilkes: I was once waiting in Elgin for a bus, these things. The lack of guidance is leaving a big and one of the younger passengers was complaining hole in the Transport Act 2008 and the 1985 Act. that he was having to go to work by car because, there, it is all day free travel and he could not get on Q241 Chair: Ms Harvey, did you want to add the bus because it was full of pensioners having a anything? day out in Aberdeen. The fares were very high in that Victoria Harvey: Yes. In Milton Keynes, it is not so particular area, and I think it was because they had to crucial and it actually stops it being so evenly squeeze the paying passengers more and more because distributed, but you are getting problems with early such a high proportion of the passengers were morning buses where, because pensioners cannot get concessionary. buses in the early morning to morning hospital Giles Fearnley, who is now the head of FirstGroup appointments, the hospital is having to send out an Bus Division, who used to be head of Blazeﬁeld, told individual ambulance. The cost to the public purse the CBT meeting that on Yorkshire Coastliner they has quadrupled. were losing quite a lot of fare-paying passengers who On concessionary fares, the crucial thing about getting did not like the overcrowding that the concessionary people to use the bus as a tool of marketing is giving system had caused. People going out to Scarborough people free bus passes. What happens is that, because were causing people in York to drive to work instead they see granny going out and using the bus and of going on the bus, and they did deﬁnitely lose fare- having a great time, suddenly buses that were the paying passengers as a direct result. despised form of transport become a way forward. David Redgewell: I agree with that. The problem we There is a huge marketing tool. Around me, now have with the Somerset network packing up concessionary fares change the lives of a lot of my between 5 o’clock and 8 o’clock at night, with the neighbours. The great dream of them is that you get exception of the routes to Wells and Bath and one to more concessionary fares travelling; that would Weston-Super-Mare and the Minehead-Taunton route, support more bus services; that, in turn, would then is, effectively, that people now scramble in Bristol to support people who needed to get to work, and cut get back. You get the pensioners and the disabled congestion. There is a very clear example of that in passholders all trying to get on to the last 7.20 pm Fife with Stagecoach. commuter coach out of Bristol which goes down to But the tragedy with us is that, because of the cut to Street. That last commuter coach used to be at 10.20 concessionary fares, you are basically thinking you do pm. You now have passholders effectively blocking not want to promote this service because you will get up middle class commuters trying to get back to their lots of concessionary fares on it and it is not worth Mendip towns and cities. So there are some issues to running. I am on the steering group for this service to be resolved there. the south of Leighton Buzzard, and we are actively There is also the issue of disability and what aspects thinking how to discourage concessionary fares you put on the passes for disabled people. But I because it is not worth it and it could destroy the understand also the Government have cut the half fare commercial viability of the bus service. It could be for pensioners and disabled people from the the biggest opportunity to transform bus travel if it Stagecoach Megabus networks, and that is coming was properly reimbursed. The cuts in reimbursement through in October. So I am quite concerned about are just heartbreaking, because you are seeing services that. But I think there needs to be more regulation of closing because of that. those passes and I am wondering, as the railways Chair: Thank you. On that note we have to conclude restrict it at the peaks going out of London and this part of our meeting. I thank all of you very much Birmingham, whether we should have peak for coming and answering our questions so openly. restrictions if we have limited buses in the other Thank you very much. direction.

Q240 Iain Stewart: But do you think the local discretion on that should remain or should it be national? cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03

Ev 46 Transport Committee: Evidence

Examination of Witnesses

Witnesses: Norman Baker MP, Parliamentary Under-Secretary of State, and Anthony Ferguson, Head of Buses and Taxis Division, Department for Transport, gave evidence.

Q242 Chair: Good afternoon and welcome to the localism as to how they respond to their situation with Transport Select Committee. Minister, did you want the finance they have. to make any opening comments before we go to questions? Q244 Chair: The evidence we are receiving from Norman Baker: Not really, except, since you have around the country paints a rather different picture. invited me, let me say that this is an interesting time Areas like Somerset say there will be a 50% reduction for the buses. There are a large number of in local authority funded services. Cambridge and uncertainties at the present time. There is a Northamptonshire say they are going to phase out all Competition Commission inquiry, and we will find out of those services, and we have reports of fares shortly what their initial thoughts are. There have also increases, in Arriva, for example, of up to 8%. Does been, obviously, changes to the finance arrangements that picture surprise and disturb you? through the spending review and the BSOG changes, Norman Baker: As I say, we are getting a varied and there is the extra money we provided through the picture across the country, and you have quite fairly Local Sustainable Transport Fund and for community drawn attention to individual councils where they transport. Quite a lot of different things are happening have chosen to save money—I would say at the same time. So this is an interesting time, I think, disproportionately—from bus services, in order to for you to be having a look at buses. protect other services they are delivering. I could equally quote to you East Riding, Kent, Luton and Q243 Chair: Buses carry twice as many passengers Peterborough, where there have been no cuts in bus at as rail and the London Underground put together, yet all for the year 2011–12. We are seeing a varied perhaps around £200 million a year is going to be cut picture across the country, which is a reflection of the from funding for bus services under the savings and new localism agenda and the ability of councils to changes that you have put forward. Do you think that make their own choice as to what is important for bus users are being unfairly penalised? them in their areas. Norman Baker: No. I think, if anything, that is the opposite of how things are. I have been very careful, Q245 Kwasi Kwarteng: I am very interested in what and the Department for Transport has been quite you said in terms of the regional variation because, careful, to try to make sure that there is not an undue clearly, in the last session we heard people were impact on bus users. Of course, with the spending worried that there had been big cuts. You are saying position the way it is and the background economic that in certain areas there have not been, which may position, we have had to accept this as a Department well be true. But what can you do to reassure the generally, and bus users as well have had to take their people in areas where they have had cuts in their fair share of any savings that have to be made. services that this is not going to be part of an ongoing If you take BSOG for example, there has been no cut trend and that the Government still remains committed at all this year. There is a 20% cut next year, which is to bus services in general? less than the average cut of 28% for revenue savings Norman Baker: This is partly the intention of in the Department for Transport. The bus operators localism. We are committed to bus services and I want themselves have said that the level of cut, first of all, to see more people on buses, but, also, we are not in and, secondly, the fact that we have given them charge of every single bus route and bus service up effectively a year and a half’s notice of it have meant and down the country. Local authorities are quite that they are able to plan ahead. They have told me rightly the bodies that are responsible for deciding the they are hopeful that, in general terms, there will be level of supported services in their area and they no consequence for bus passengers as a result of that choose to exercise that in different ways. particular change. That is an example of how we have Our job, centrally, is to make sure that the framework managed to bring things forward in a sensible way to and the legislation is correct to make sure that we do avoid an impact on bus passengers. That, of course, not have chops and changes in policy which cause bus relates to the main support mechanism for bus companies uncertainty about the future. I think we operators. Of course, 78% of services or thereabouts have given them some certainty. We are seeing, for are commercial services and they are therefore subject example, bus companies investing now in new buses. to that level of support from the Government more There are a large number of new orders coming than any other. I am hopeful that, in fact, the impact through. The Green Bus Fund, for example, has been on bus passengers will be relatively little as far as very sensible and helpful in setting a direction about commercial services are concerned. low carbon buses. We are doing what I think is There is a secondary issue about supported services appropriate for the centre, but, ultimately, for local which are predominantly through tendered services in areas it is up to local councils what they choose to do local councils. There, we see a varied picture across in their individual patches. the country as to how local councils are responding to their particular financial settlement from Communities Q246 Kwasi Kwarteng: Can I just ask you a and Local Government. Some councils are responding question on that? Sure, many MPs—certainly on the by protecting bus services entirely; others are Government side—have signed up to the localism choosing, because it is a non-statutory service, to agenda. But, as a Transport Minister yourself, do you reduce those services. But, ultimately, it is a factor of see any minimum provision that the Government cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Transport Committee: Evidence Ev 47

3 May 2011 Norman Baker MP and Anthony Ferguson should guarantee should be provided all across the back in the centre.” They have to be free to make country, because, clearly, if we take a thought their own mistakes, if you like. We are taking away to experiment, we could have a local authority that Government. We are taking away ceilings from local decides for whatever reason not to have any bus councils and we are also taking away floors, and we services at all? You are not saying to me that, as a will see a much more varied approach across the Government Minister, you would say, “I am quite country. happy with that, because that is the localism and that is the decision they are taking.” Surely there must be Q247 Chair: But local government has a basic cut of some minimum provision that you have in mind that 28% in its formula grant and in many cases a lot you can guarantee. deeper cuts on top of that. Is it not totally unrealistic Norman Baker: What is the function of a bus service? for you to expect local government to make up for Let us go back to basics, if you like, on that. It seems the additional cuts that Government are imposing on to me that the bus policy ought to have three local transport? objectives. One is to deal with the environmental Norman Baker: First of all, the formula for local impact of transport and to try to persuade people to government is a CLG matter, of course, rather than a use the bus for environmental reasons. There is an DfT matter. economic benefit to buses directly, by providing access to employment, but also by, for example, Q248 Chair: Nevertheless it is a fact, is it not? leading to a method by which congestion in urban Norman Baker: It is a fact that there has been a areas can be reduced because more people are on significant challenge given to local authorities in terms buses and fewer are individually in cars. So there is of funding this year, that is absolutely right, but in an economic benefit from buses. Then there is a social terms of how it is structured and the amount of money benefit from buses by providing access for people who per council, of course, that is a matter for CLG. otherwise would not be able to get from A to B. Secondly, I gave you a list of some councils already It seems to me that, largely but not exclusively, those making no cuts in bus services. It is perfectly possible first two objectives—the economic and environmental for some councils, it seems, to be able to construct a ones—are delivered through commercial services mechanism within their own area where bus services which carry the vast bulk of people in this country are protected. Others are making very deep cuts; so and which are not, I believe, under threat because of that is a matter which they are choosing to exercise the way we have restructured BSOG. Those will locally. The third point I would make to you is that continue largely without change—change in terms of there are opportunities for local councils to make services or even change in terms of fares. So those significant savings, in some cases, without affecting two objectives continue to be met. The third front-line services on buses. What I mean by that is, objective—the social objective—is one which is met first of all, engaging in a more productive way with by bus services which are largely uncommercial and their local bus companies. Some councils, like therefore subject to local authority judgment. It is up Brighton & Hove and York, for example, have done to local authorities in each area to say what they think that very well indeed and are providing in those two their social objectives are. Personally, I would regard cases a good level of service at good value to the it as very regrettable if individual councils decided to taxpayer locally. Other councils have a much more withdraw all subsidised services. Personally, I think it frigid and unhelpful relationship with their bus would be a mistake if they were to do that in terms of companies and I think that is reflected in the level of looking after their individual populations. But, bus service locally. ultimately, it is their judgment to make and not mine. It is also the case that some councils have found I do not see a minimum level of provision in the savings, for example, in how they structure their own country as something which we should dictate services, but there are still councils you can find centrally. I do think we should put in place the where there is one lot of people dealing with architecture to try to ensure that we send the right supported tendered services—bus services for the signals both to the industry, which I think we are general public—and there is a different lot of people doing through BSOG and through our support for dealing with buses which are run for adult social care, green buses, for example, and also to local authorities. and another lot of people dealing with buses which are The Local Transport White Paper “Creating Growth, for children, and indeed three different sets of buses in Cutting Carbon” sets out very clearly the two high- some cases. I do not believe that local councils, in all level objectives the Government want to achieve in cases, cannot find savings. I think some are finding transport: using transport to create growth and cut savings; some clearly find it more difficult. carbon. I do not want to pretend it is not a problem. I do not We have also provided, as you know, the Local want to pretend that local councils are in a wonderful Sustainable Transport Fund, which can be used for position. They are not. Clearly, they have a very enhancements in bus services and to secure modal challenging settlement. But I do think that, with some shift. Local government are quite clear what they want imagination, they can protect services, by prioritising to do. But we have to accept in the new era we are in them if they choose to do so. Surrey County Council, that it is not possible for central Government, on the for example, have restructured their actual tendered one hand, to give local councils freedom and then to services and their routes to make sure that people are criticise them when we do not think they are doing protected as far as possible within the saving. With the right thing and just say, “We’ve decided you won’t some imagination, that can be done. Other councils have the freedom after all. We will take the power are showing less imagination. cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Ev 48 Transport Committee: Evidence

3 May 2011 Norman Baker MP and Anthony Ferguson

Q249 Iain Stewart: We have received some evidence environment for the motor car is unfriendly. I am not in our inquiry that there is an issue and a problem suggesting as a public policy that towns and cities with local authorities co-operating with each other should make themselves unfriendly to cars, but as a where the nature of travel to work patterns or basic matter of fact that seems to be the determining factor geography inevitably means buses have to cross from as to when buses are used more. I would not one authority to the next. In some areas there seems recommend anyone in this room to try to drive into to be a lack of co-operation and forward planning. Do Brighton. I would strongly recommend you get the you think it is sufficient to rely on the localism train or the bus if you wish to do so, because it is a agenda, and these authorities will naturally start to nightmare getting in and you cannot park. I think work together more, or is there a need for some other those factors are more important in causing modal body—perhaps the LEPs or some other body above shift to bus than perhaps a temporary or limited local authorities—to take a co-ordinating role? change in fuel prices, which also, as I say, affects Norman Baker: A good local authority will identify bus users. the opportunities and the constraints within which it On the second point about cross-subsidy, that is a very operates for the delivery of bus services. If one of the significant and important question, if I may say so, constraints is what is happening across the border, and I imagine that it will be one which the then that local authority, I would have thought, would Competition Commission themselves are seeking to be in touch with its neighbour, because presumably address. But there is, it seems to me, a tension there will be value for the second local authority in between a commercially run service and a tendered having a common position. In many cases that works service. If you look at the three objectives of bus quite well. I know, for example, on my own patch policy which I outlined a moment ago, the economic there are discussions between East Sussex and Kent and the environmental ones tend to be delivered about buses that run through from Brighton, a unitary predominantly but not exclusively by the commercial authority in fact, through East Sussex and on to Kent. operators, and the social bus objective tends to be Those sorts of services can be planned. That is a delivered predominantly but not exclusively by commercial service but, still, the local authorities are tendered services. involved in it. That could be sensibly planned. I would If you want to get, for example, carbon reduction from hope that local authorities would take the opportunity transport—and one of the ways of doing that is to to work sensibly together where that is necessary. make the bus service really attractive—that would I do not think the answer to a local authority which lead you to a conclusion that what you should do is fails to show imagination is to impose an unelected run a high frequency bus service along main roads body over the top of it to deal with that problem. LEPs such that people turn up at the bus stop, they know have an important function. I think there is a regional the bus is going to be there, and they do not have to transport function but I do not see it personally as wait and look at the timetable. being one that delivers local bus services. That is a different proposition from a bus which goes along the main road a bit, then diverts to meet Q250 Chair: If I may move on to a slightly different Mrs Miggins down a side street and then it picks up area, we live in an era of high petrol prices, which, as at the post office and goes to the hospital and back on far as anyone can predict, is going to be here for the the main road again, because that would be foreseeable future. That creates a golden opportunity unattractive to the people you want to attract out of for a renaissance in bus usage for people that cannot cars, who want to get from A to B quite quickly for now afford to use their cars. Who should be in the business or school or for other purposes. driving seat, if you pardon the pun, for marketing that I personally think, in my own mind, it is dangerous in opportunity? Is it the bus companies themselves, the terms of securing increases in bus use to seek to do Department, the local authorities, or a mix of all too many things with the same bus. Different buses three? do different things. As a supplementary to that, to what extent do you see the potential for a cross-subsidy from increased Q251 Kwasi Kwarteng: Can you tell us a bit more patronage of commercial routes into supporting the about the decision to reduce BSOG by 20%? Was that socially supported ones? something that you felt was on a temporary basis Norman Baker: That is a rather separate question. I inasmuch as it was driven by the financial situation will try not to lose that one. I am not sure in my own we are in, or did you feel that there were some more mind that the increase in fuel prices provides that fundamental reasons why perhaps you wanted to much of an incentive to switch from the private motor reduce this amount of money? car to the bus. Bus operators will tell you that they Norman Baker: As the Department for Transport, we also have fuel costs which are rising in line with fuel had a requirement to deliver savings to the Treasury, which is purchased by private motorists, although of as did every other Department in Government. We course they do benefit from BSOG, which gives them obviously had discussions among the ministerial team a rebate. It is also the case that buses are becoming and others about how best that can be delivered, about heavier and less fuel efficient, which is a problem how to make sure that we identified the waste that which concerns me, because of the air-conditioning, there was and the unnecessary spend first, and then, the lower floor platforms and everything else which is where that was not always possible, to see whether now going into buses. or not you could minimise the impact on services by Where I do think buses have success, and in areas particular choices. It was quite a detailed involvement like Brighton where they have grown, is where the and exercise to try to work out where best to go on cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Transport Committee: Evidence Ev 49

3 May 2011 Norman Baker MP and Anthony Ferguson that. Obviously, the Treasury then had to be happy concessionary fares, with the BSOG cuts to come. It with what we were recommending on that. is that combined effect that seems to be inflicting the I do not hide the fact that I wanted to make sure we greatest damage. did not have a particularly severe impact on buses. Of On concessionary fares, there are areas like course my objective as bus Minister was to try to Oxfordshire which are receiving over 50% less than secure that. We saw in the press, in the run-up to the they have before in funding for concessionary fares, spending review, all sorts of scare stories suggesting and we have a lot of evidence from different parts of that BSOG was going to be abolished. Actually, there the country saying that the revised funding for turned out to be no cut this year at all, which is a good concessionary fares is unfair and is having a very achievement for the Department. Then, secondly, the disastrous effect on local bus services. Are you cut next year is lower than the average revenue cut concerned about that and do you intend to revisit for the Department. It is clear that we wanted to do that area? our best to protect BSOG and we value it, as indeed Norman Baker: Let me deal first of all with your do the bus operators and local councils. cocktail, because it is not a cocktail I want to accept That is not to say that BSOG in its present and therefore I want to deal with that first. You say arrangement is perfect. We have a commitment in the there are three things. First of all, I do not believe the Departmental Business Plan to look at how BSOG is BSOG is a problem, for the reasons I have given. The delivered. By March 2012, we have chosen ourselves cuts to local authorities in terms of their grant are, in to come up with an alternative way forward of looking some cases, having an effect on local services in the at BSOG and reaching our conclusions and putting 21% of services which are supported, but not in all them out for discussion by that time. cases. That is a matter for local councils. They have a To deliver that, I am obviously talking to all interested challenging settlement but some have avoided making parties about BSOG in preliminary discussions. They cuts. But there is an impact there on some of them. are helpful. It is helpful that they are not particularly high profile at the moment because, obviously, we Q254 Chair: But, Minister, some local authorities want to have a full and frank exchange of views. We have far fewer cuts than others, have they not? Some will look at what BSOG is, how best it is delivered local authorities, particularly those in the most and whether or not any changes are needed there. But deprived parts of the country like Liverpool, have the 20% cut was delivered to meet the desperately actually had massive cuts, higher than anyone else. difficult economic background we have as a country Norman Baker: If you are asking me to comment on rather than any philosophical dispute about BSOG. the CLG formula, I am not able to do that.

Q252 Kwasi Kwarteng: What I am slightly unclear Q255 Chair: I am not asking you to do that. I am just about from your various answers is the extent to reflecting the facts about what has actually happened. which you feel that the reduction to BSOG has been Norman Baker: In terms of the impact on local bus reflected in cuts to services. From what you are services from the local government formula saying, I think you are suggesting that it was the local settlement, as I say, some councils are protecting variation and it was the responsibility of councils to services entirely; others are making swingeing cuts. keep services going, and it has very little to do with Most of them are making cuts of about 15% to 20%, the general picture of austerity. I think it is. Norman Baker: I do not believe there are any cuts, On the third element, the concessionary fares to which or hardly any cuts, in bus services now which are as you referred just there, we have simply issued new a result of the changes to BSOG. Apart from anything guidance to local authorities in order for them to meet else, they have not come in yet and they will not be their statutory obligation, which is to ensure that bus coming in for another 12 months. As I said earlier on, companies are no better and no worse off from the operators themselves felt that, in general, the administering the concessionary fares scheme. That is BSOG reduction next year could be absorbed without what we have sought to do in terms of what the DfT an impact on services. We projected in the abstract has done and we have issued that guidance. The what might happen before I talked to the bus evidence was that the new guidance is more accurate companies. I think that was sent, to you, Chair, as in delivering that legal objective. We are not changing part of the DfT initial thoughts early on, and officials the entitlement of concessionary fares; we are not predicted 1% or 2% changes at most as a changing the primary legislation. All we are doing is consequence. I hope even that will be avoided, given issuing and have issued new guidance to enable local the notice we have given. It is not commercial bus councils, if they choose to use the guidance, to deliver services that are being cut. They are services which that legal objective which remains unchanged for are supported by local authorities through the them. It is up to them whether they want to do so or tendered process. not. We have taken a poll of about a third of travel concession authorities. Of those about three quarters, Q253 Chair: The evidence that we have received we think, are using the guidance that we have issued. reflects great concern about the combined impact of a number of cuts, including the cuts to local authorities Q256 Chair: The bus companies say that they are a in general, some having much bigger cuts than others; lot worse off and they may have to recoup their losses there is a major problem there. Then there are the cuts by other means, such as putting fares up and changing in funding for concessionary fares. The Department other services. Is that something you just expect the expects to save over £77 million a year on funding for bus operators to say or is it of concern to you? cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

Ev 50 Transport Committee: Evidence

3 May 2011 Norman Baker MP and Anthony Ferguson

Norman Baker: Let me put it this way. The position concessionary fares scheme. Is it now a good time to before we issued the guidance was that bus companies have a review of how it is operating? We have had could expect to be no better and no worse off from some evidence presented to us that many users of the operating the concessionary fares scheme. The scheme, while of course welcoming free travel, would position after the guidance was issued is that they in fact be willing to make some payment if services should be no better and no worse off from were better protected. administering the scheme. So nothing has changed in Norman Baker: One of the questions from you, Chair, that regard. If bus companies are much worse off, it was about the uncertainties in the differences and the is because they were being overpaid before for the changes which have been made. So I am not sure that work they were doing in administering concessionary you necessarily want to add further changes which arrangements. If they believe that they have been might give more uncertainty, if that is the concern that unfairly treated, then they can of course appeal, which you have. I understand why some people feel that they are entitled to do. would be a sensible policy. I understand also that people might feel in a time of economic difficulties, Q257 Chair: Are there any appeals going ahead? when we are having to save money, that asking people Norman Baker: From this year? for a contribution might be a sensible way forward. I Chair: Yes. can say, however, that this matter was considered very Norman Baker: Anthony, do you know that? carefully by Ministers. The Prime Minister himself, Anthony Ferguson: The window does not close until and indeed the Chancellor in his spending review, 25 May. made it very plain that there was no intention to Norman Baker: Okay. change the present entitlement. That remains the position of the Government and that will be the Q258 Chair: Are there any appeals pending? position, I anticipate, for the foreseeable future. Norman Baker: The window is not open yet, as I understand it, for this year. But, in terms of the Q262 Iain Stewart: Was any research carried out on appeals in previous years, I think I am right in saying whether the concessionary scheme could be means- that last year—Anthony will correct me if I am tested in some way? Is there any evidence that the wrong—there were about 30 appeals, of which only cost of conducting that means-testing would negate about three or four were found in favour of the bus any revenue benefits? companies. Indeed, the conclusion was that, had it Norman Baker: Theoretically, if you were doing to been possible under the regulations at the time to find do something at all, you would have a flat fare to be in favour of the local authorities, then that would have paid either for a journey or a flat fare for the pass each been a conclusion which would have been reached year, because that could be administered relatively for a reimbursement of local authorities. I am actually cheaply. That is not the policy, I stress, but if you changing the rules to ensure that, when a matter goes wanted to do something that is what you would do. If to appeal, it is possible for local authorities to win as you were to means-test it, that would be enormously well as bus companies. I think it is only fair that that expensive. It would, indeed, negate the benefits of the should be the case. That is a new rule coming in pass and cost a lot of money for either the councils or shortly. the Government to administer. Q259 Chair: Would the local authorities have the extra funding to give if they have already been cut Q263 Iain Stewart: I have one final question, if I back? may, on this. The national guidelines suggest a 9.30 Norman Baker: Extra funding to give in what sense? am cut-off, to not allow the pass at peak times. Do you think that is working, or is there any revision Q260 Chair: If appeals were won and the companies planned for that guidance? showed they were right to get more funding, how Norman Baker: It is right in principle that the could that be given to them with the cuts that have concession, so as not to become unaffordable and also already taken place? not to put excess strain on existing services, should Norman Baker: It is quite a detailed process for a bus not be used by people who are going to work and company to submit an appeal in the first place, and earning money. I think that is right. Disabled people therefore they have to be reasonably sure that they are would be in a different category, but it is certainly going to be successful, I would suggest to you. They right for pensioners and so on. It seems to me that the have to be even more sure than they would have been purpose of it originally at least was, and still largely last year because there is now a possibility that the is, to provide something to those who have retired. award can go against them and in favour of the local It would be quite wrong in some ways if you ended council, which was not the case last year. But if a local up with a system whereby those in work and earning council have perversely and obviously not applied the good money were subsidised by other people to take guidance and the bus operators are much worse off their bus journeys. It would also have the consequence unfairly, then it is only right that they should have to of putting more people on buses when those buses meet their legal obligations to ensure that bus were busy and therefore may lead to extra buses companies are no better and no worse off. having to be put on by the operators, which would then further drive up the cost of the concessionary Q261 Iain Stewart: I would like to ask some fares scheme. I personally think that the 9.30 am questions on the operation of the national arrangement is about right, although, if local cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

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3 May 2011 Norman Baker MP and Anthony Ferguson authorities wish to supplement that by a 9 o’clock start to maintain. That may be one explanation. Another or an 8.30 am start, indeed, they are free to do so. explanation possibly is that those services which are The one area where I have some sympathy, and I have marginal in commercial terms have been withdrawn come across this in my own constituency, is where by bus companies, perhaps in the expectation that they you have a bus at 9.25 am and the next bus is at 11.25 will be re-tendered with a subsidy from the local am, and someone has a doctor’s appointment. In those council, because a subsidy from the local council circumstances it is open to local authorities either to would obviously be marginal itself for a service which exercise some flexibility on the individual services or is near-commercial. So there is a synergy in those to move the time by, say, five or 10 minutes, if that is two elements. the problem. I know one or two authorities who have If bus companies find tendered services withdrawn actually said, “It will be a 9.30 am start, but on these and they have bus drivers who are employed and not services we will allow it where people turn up for being used, then they may well take a fresh look at those particular individual services where there is a whether or not commercial services might fill the gap two-hour gap until the next one arrives.” That seems for some tendered services which are withdrawn. to me to be a common sense, practical response to the situation. Q268 Chair: Do you have any concerns about the way commercial services operate or are you awaiting Q264 Chair: Is the Department carrying out any the results of the investigation that is going on now? research on how the national concessionary scheme Norman Baker: The Department has provided is working? information to the Competition Commission about the Norman Baker: We carry out research on a regular operation of the market. I do not think it would be basis by talking informally and formally to people in appropriate at this stage, ahead of the Competition the bus industry and to local authorities. I chair a bus Commission, to go into too much detail about what forum which takes place every six months at which we have said on that. Obviously, there are concerns issues such as that are raised and we get feedback. If that we have expressed in some areas. We have drawn it appears to be the case that there are individual issues attention to various facts. We published the report which are arising and we get some background from LEK Consulting, as you will know. But I would knowledge on something, then clearly we dig into it rather wait, if I may, until the Competition further. Commission have reported and then give you a proper response when I have had a chance to see what they Q265 Chair: But, at the moment, there is nothing have to say about that. specific you are looking at. Norman Baker: I have not sent officials off with a Q269 Chair: When do you expect that to be? particular remit to come back with a specific formal Norman Baker: Very shortly. I expect them to publish report on something, no. their interim findings and suggested remedies. As you know, there is then a further period in which Q266 Chair: You are not looking at any restrictions comments can be made before a final report is on the scheme. produced. Norman Baker: No, not at all. The scheme is what the scheme is, and it will carry on in the indefinite Q270 Chair: When is that? Is that this month or future with the entitlements it has. The national next month? scheme will carry on. Obviously, local authorities can Norman Baker: Very shortly. add to that if they wish to do so. Chair: This month. Norman Baker: Yes. Q267 Chair: Bus operators have expressed concern about the impact of ceasing some tendered routes on Q271 Chair: What about community transport? Are the rest of the commercial network. For example, if you expecting community transport to fill the gap people are going out for the evening and want to use when other services are removed? a bus, if there is not a bus back which might have Norman Baker: Community transport fulfils a been paid for by local authorities before, they might number of functions, social functions mainly, because not travel by bus at all. Is that something that you obviously they are not running a commercial service, have come across and on which you have done any otherwise they would be run by commercial bus research? companies. But they have a range of different Norman Baker: I think there is an interesting synergy functions. One function is to help those individuals between commercial services and tendered services, who, for reasons of disability or whatever, might not perhaps not in the way you have suggested, nor in the be able to access normal commercial transport. way of individual routes, which was discussed earlier They also have a function in identifying the needs of on. Over the last 10 years in England, outside London, particularly isolated rural communities. This is where commercial services in terms of vehicle miles have they may come into their own, and I have given, as gone down 17.5%, whereas subsidised services have you know, £10 million extra funding to local gone up 25.4%. It seems that local authorities have authorities to try to kick-start a drive in community been providing more and more services in the last 10 transport. We are also giving extra help by way of years, while commercial services in terms of mileage advice to local councils as to how they might deploy have to some extent retracted. That may be a that money in the best way. We are giving six hours’ reflection on bus use that local authorities have tried consulting to each local authority so that they can get cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

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3 May 2011 Norman Baker MP and Anthony Ferguson the expertise from us, in so far as we can give it, to Q274 Chair: What more could be done about help them best deploy that money. bringing different transport providers together: health In terms of providing an alternative to commercial providers, hospital transport, social services, services, it seems to me that, irrespective of the education? Is there anything the Government or savings agenda that we have had, there is a question anybody else should be doing to look at that again? in my mind as to whether or not it is sensible for a Norman Baker: I think you are right to pick up on double-decker bus to be trundling around country that. That reﬂects the point I made earlier on, which lanes to pick up two people, or whether there is a is that you sometimes have local councils with three better way of doing that anyway. If we are dealing different lots of people doing three different lots of with those isolated rural communities, I think perhaps things, with three different lots of buses, and some of they are entitled, to some degree, to some support them sitting empty all day. But that really is a matter from the local council for their transport needs, but it either for the county council or unitary authority in a should be tailored to their needs. It seems to me, as a particular area to try and deal with. They are the general point of principle, that having a vehicle which transport authority; they are the ones who deal with is appropriate for a very small group of people is adult social care; they are the education authority. something which makes commercial sense anyway, They are very well placed indeed to get maximum use rather than, as I say, deploying an inappropriate out of bus services and their own vehicles in the way vehicle. I would hope that local councils, irrespective that some but not all of them do. That is a matter for of the savings agenda, will be looking at how best them to take forward. It is not something in which it they can deliver transport for rural areas which are is appropriate for central Government to intervene isolated in particular. except to draw attention to it.

Q272 Chair: The Community Transport Association Q275 Kwasi Kwarteng: We have heard in a previous tell us that they can fill only 10% to 15% of the gap submission that people were worried that you were left by the removal of tendered services. Do you not giving enough guidance in general to local accept that? Have they spoken to you about changes authorities. Could you say a little bit about that, that you might make? They have said to us that, for particularly in respect of the concessionary fares example, the concessionary fares scheme should apply reinvestment to local authorities, because there was a to community transport and that would help them suspicion certainly earlier in the year that the operate. Is that something you have thought about? Government had not been specific enough about Norman Baker: It does apply to community transport certain guidelines they should be giving? in so far as they are running bus services. If they get Norman Baker: I am surprised to hear you say that, a section 22 permit, then they qualify for BSOG and because we are normally criticised for having too much guidance coming out of Whitehall. If you made the other arrangements which relate to normal bus the case on concessionary fares a year ago to say the services. Where they do not qualify is if they have a situation is unclear, it would have been a fair criticism. section 19 permit when they are not running a But we have now refined the guidance, thanks to the commercial or commercially or publicly advertised University of Leeds, and that guidance has been service. That is the difference. In so far as they run issued. We have had, I think I am right in saying, bus services like the community bus service in my seven hours where we have been able to talk to local locale, then people do qualify. authorities and explain to them what we are trying to In terms of filling the gap, the community transport do and help them with any questions they have. It is sector is patchy. Obviously, it is stronger in some on the website, with Q&A, and everything else we areas than others and it does not necessarily follow, have provided for them. So I think we have done quite unfortunately, that the areas where it is strong are the well on guidance. areas where the bus services may be reduced beyond We have also issued guidance in other respects to the average by local councils. I have asked officials to local councils to back up, for example, the Local build up a picture for me as to what the impact of Transport White Paper. We have produced a carbon local authority decisions is on bus services so that we tool, which is an attempt to help local councils work can have a good picture as to decisions they have out how best to save carbon from their transport taken in their own areas. We are also trying to match operations. What we are trying to do, in a way, is to that with community transport provision to find out provide the extra which is not reasonable for local whether there are indeed individual areas where authorities to provide themselves. We cannot expect people are significantly disadvantaged by decisions every local authority to provide a Carbon Tool. That taken locally. would be a bad use of funds. But we can provide that and then let them use that in the best way they can to Q273 Chair: Does that mean, then, that you are decide their own transport priorities. looking again at how community transport could be helped to expand? Q276 Chair: The Local Government Association Norman Baker: We are helping community transport, have put a proposal forward about putting all bus as I say, by the £10 million provided to local subsidies in one stream under the control of the local authorities to enable them to enhance their provision. I transport authorities. What are your views on that? meet community transport organisations on a frequent Norman Baker: We are in discussions, as I have basis in my capacity as Minister. So, of course, we are mentioned to you, with both local authorities and the looking at how best we can help them. bus operators about what might be done in terms of cobber Pack: U PL: COE1 [O] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

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3 May 2011 Norman Baker MP and Anthony Ferguson

BSOG for the future. Those discussions are Southend-on-Sea, for example, has a policy of not continuing and we will reach a conclusion which we having any subsidy or help at all for bus companies. will be able to share with you in less than a year. That There are other areas where you have a bad is, I think, what they are referring to there. In terms relationship between bus companies and local of other support, then it is there in the formula grant authorities, and obviously the passenger is the one from CLG. who suffers.

Q277 Chair: What about their main proposal that all Q280 Kwasi Kwarteng: You have identified areas subsidies should be put together and controlled where there could be improvement. Do you see it as directly by the transport authorities? Do you agree the job of central Government, perhaps through with that? legislation, to make that work in a more satisfactory Norman Baker: The formula grant already has the way? subsidy which is recognised for concessionary fares Norman Baker: It is our job to make sure that, first already there. The BSOG arrangements are the ones of all, we give that high-level certainty over the which I have identified and we are discussing the direction of travel to bus companies. We are giving question as to whether or not further local devolution high-level certainty over BSOG. We have set out what is appropriate or not. we are doing for three or four years. We are giving high-level certainty over low carbon issues by the Q278 Chair: Are you intending to issue any Green Bus Fund. We are giving high-level certainty guidance about consultation? over, for example, the smartcards, by the consistent Norman Baker: On what? message we are giving to the bus operators and local Chair: Consultation on changes to bus services. councils that we are serious about smartcard roll-out Norman Baker: No, not really. I think that is a matter and technology, which we think has the potential to for local authorities to take forward themselves. We drive up passenger numbers and make a real gear have seen some good examples of consultation. I change in terms of bus usage, and train usage for that know Passenger Focus have done some research to matter, in this country. look at which councils have consulted well and We are also responsible for the architecture of the appropriately with their local areas. For example, East legal arrangements between bus companies and Sussex, which is my own patch, Shropshire, Surrey councils through the Local Transport Act 2008, and Worcestershire have consulted in a way that which, as I say, we have not sought to change. That Passenger Focus believe is good practice. Others have is our job. I do not think it is our job to tell Much done less well. Hadham Borough Council how they should negotiate with Much Hadham Bus Company. Q279 Kwasi Kwarteng: I am interested in your view of the relationship between the Government and the Q281 Iain Stewart: There are quite a number of local authority. Clearly, you are saying that because of areas of bus operation where you have painted a very localism it is really up to them, but what could you mixed picture across the country. There are some very tell me about how you think the relationship between good examples and some poor examples. What is the the bus operating companies and the local authority most effective mechanism of sharing best practice? Is should be? Is that an area which you are satisfied, as that through, perhaps, Passenger Focus or is it through a Minister, is going well? the Department? What would be your thoughts on the Norman Baker: There are provisions under the Local best way of sharing that? Transport Act 2008 which enable local councils, if Norman Baker: There is no one answer. There are a they believe the arrangements are not working well number of different avenues which we try to use. First with bus operators, to move towards a quality of all, I do value the fact that Passenger Focus are partnership or, indeed, a quality contract, if they now engaged in some bus work. I think they are a choose to do so. We have not made any changes to competent organisation and I work well with them, as that legislation as a Government and we have said that in fact does my colleague Theresa Villiers on the rail we will wait for the Competition Commission to side. Equally, I value the work of Bus Users UK, report to consider whether or not any changes need to which is useful on some of the nitty-gritty stuff on be made to that architecture. That is the main way in buses and reporting individual problems. The Bus which, I think, from the centre we would influence the Appeals Body, which comes out of Bus Users UK, is relationship between bus companies and local also helpful in identifying problems. authorities. From the centre, as I mentioned, I have these bus Under the present arrangements, which, as I say, do forums or bus fora, which meet on a six-monthly basis include the option for partnerships and contracts, it where industry, local authorities and others come seems to me that the performance is, frankly, mixed together to talk about issues, for example, such as across the country. There are authorities—again I disability on buses. We can share ideas there and mention Brighton and Hove; Oxford; and identify problems. I have had two of those so far. They Cambridge—where it seems to me there is a buy-in have been, I think, very useful meetings. I call ad hoc from the local authority and the operators which is meetings to discuss issues. I called one between the leading to a good bus service for local people and bus and train operators to talk about the integration of which is leading to, in many cases, an increase in bus and train. We have those sorts of meetings as well. patronage of buses. There are other areas where local In terms of other avenues of best practice, I think the authorities are providing, frankly, very little support. LGA needs to do more. I am quite open about that. In cobber Pack: U PL: COE1 [E] Processed: [02-08-2011 15:26] Job: 012933 Unit: PG03 Source: /MILES/PKU/INPUT/012933/012933_o003_th_110503 - Buses OE 3 - CorrectedTranscript.xml

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3 May 2011 Norman Baker MP and Anthony Ferguson this new era of localism, the LGA should not simply Norman Baker: The major concern is not what I see itself as a body which lobbies central Government, should be doing. One of my major concerns is how as I think too often it has been. It increasingly needs one or two local authorities appear to have decided to to step up to the plate and identify good practice and cut drastically their bus services without, I believe, bad practice and spread that through its own members very much consideration of the consequences. But that in a way that I do not think it has so far. is not something I should actually do something about. That is a localism agenda. I note it, and I am Q282 Chair: Do you support quality contracts? concerned about that. Norman Baker: It is no secret, Chair, that the Lib In terms of where we are going, I want to make sure Dem manifesto did support quality contracts, and you that the concessionary fares reimbursement guidance will know my position from the Local Transport Bill is bedding down well. I am obviously keeping an eye Committee that that was strongly my view. It is also on that. I want to make sure that we are doing our best no secret that the Conservatives, before the election, to provide certainty for the industry about direction of opposed quality contracts, which is why we have travel, and I hope we are doing that. I want to make taken a rational and mature decision between us to do sure smartcards are being rolled out and we are getting nothing about the architecture until such time as the the benefits, which I think are enormous, from that. I Competition Commission report and then look at the think the White Paper talked about the majority of evidence. I think that cannot be faulted as a process. local public transport journeys being by smartcard- enabled technology by 2014. That is still very much Q283 Chair: What does that mean for now? Are you an aim that I have, and I think that is going to be a for them or against them? transformation if we can get that going. That is a high Norman Baker: What it means for now is that any priority for me. Beyond that, I want to make sure that authority that want to use the provisions of the Local we are working productively with the industry and Transport Act are free to do so and they will get no local councils, as I think we are, to make the obstruction from the Department if they want to go experience for the bus passenger as good as possible. down that road. But what it also means is that we will That means looking at, for example, everything from wait and see what the Competition Commission driver behaviour at one end to making sure that buses report. I will be astonished if quality contracts do not are safe at the other. feature in their report, and we will wait and see what We have seen, I think, a transformation in rail evidence they bring forward. If they bring forward journeys in the last 10 years when the quality of rail compelling evidence that competition is not working, travel has improved markedly for the average then clearly that enhances the case for a change to the passenger. I am not saying it is perfect on the railways, architecture. If they come back with a report that says but, in general, the passenger experience has improved everything is fine, then clearly that weakens the case. significantly. I want to see the same sort of improvements in buses. We are getting there. Some Q284 Chair: What are your major concerns at the bus companies are better than others and some local moment about bus services? authorities are better than others. Driving up that Norman Baker: That could be a very long answer. general performance, I think, is something with which I can help. Q285 Chair: I said “major concerns”. What do you Chair: As there are no further questions, thank you think you should be doing? very much, Minister. cobber Pack: U PL: CWE1 [SO] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Written evidence

Written evidence from Age UK (BUS 09) 1. Summary 1.1 Age UK is the new force combining Age Concern and Help the Aged. We are a national charity and social enterprise working to transform later life in the UK and overseas. Our vision is of a world in which older people flourish. We aim to improve later life for everyone through our information and advice, services, products, training, research and campaigning. 1.2 In responding to this inquiry, Age UK would like to highlight the following issues: 1.2.1 We are concerned the reduction in Bus Service Operators Grant will lead to a direct impact on older people’s ability to travel, because of further reductions in bus services. This potential reduction in services is likely to have a disproportionate impact on rural areas. 1.2.2 Community transport is at risk if there are reductions to BSOG. The risk is amplified in some cases where they rely on a range of funding, including local government grants, which are also facing spending cuts. 1.2.3 The value of free off-peak travel for older people who would otherwise be unable to travel locally to access services and visit friends is considerable. Passenger Focus undertook a survey in July 2009 that revealed that 39% of older pass holders made a greater number of local journeys by bus than before they obtained their pass.i We would urge the Government to think very carefully before making any changes to eligibility. 1.2.4 Age UK recognises the benefits of the bus concession are set against spending of around £1 billion per year, which means some administrative savings are necessary. However, the universal nature of the bus concession should be protected. 1.2.5 National and local government must take into account the needs and views of older people in all transport planning. The process of seeking people’s views needs to allow people to see the outcomes of their involvement.

2. Impact of Reductions to BSOG 2.1 Impact on public transport 2.1.1 It is essential that as people age, they can still get out, access local services and travel further if they want. The Secretary of State has indicated that the average reduction in bus services, as a direct result of the 20% reduction to the Bus Service Operators Grant (BSOG), would be around 1.5%.ii We are concerned the reduction in BSOG will lead to a direct impact on older people’s ability to travel, because of further reductions in bus services. 2.1.2 Furthermore, this potential reduction in services is likely to have a disproportionate impact on rural areas. The percentage of households with an hourly or better service within 13 minutes walk is just 50% in villages, hamlets and isolated dwellings.iii However, more than 350,000, or 35% of pensioner households in rural areas have no access to a car or van. 2.1.3 Bus services in rural areas are at greater risk unless the “rural premium” is taken into account in the assessment of service provision. The rural premium is the extra cost of delivery of services to people living in a rural area, compared to those who live in an urban area. To protect an already poor service, the decision to reduce services in rural areas cannot be based simply on cost and the number of people using the service; rather a broader impact assessment needs to be undertaken.

2.2 Community transport 2.2.1 Community transport schemes fill an important gap in places where private travel is not possible or the public transport system does not fully serve the needs of older people in the area. There are a range of community transport schemes providing vital services for older people, such as transporting them to day centres or providing a “ring and ride” service. These schemes currently benefit from the BSOG. 2.2.2 A number of local Age Concern organisations provide community transport schemes for older people in their area and benefit from BSOG contributions. Each community transport scheme is different. However, whatever their size or the specifics of the schemes, the common feature is that they do not operate on a profit and managers of these schemes have raised significant concerns about maintaining the current level of service if BSOG is reduced at the same time as wider funding cuts. 2.2.3 For example, Age Concern Cornwall has a fleet of nine mini-buses. They provide a range of services for the local area, including dial-a-ride and group hire for other voluntary organisations. The service does not make a profit and customers are charged for the service. They receive £6,500 from the Bus Service Operators Grant, which they say keeps their head above water so they can continue to run the service. A reduction in grant could affect their service and they are concerned about the knock-on affect this will have to their customers. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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2.2.4 These community transport schemes are ﬁnanced in different ways depending on local circumstances. Some Age Concern community transport schemes rely on a number of sources for funding, including local government grants. BSOG reductions are coming at the same time as spending cuts from local government, which puts community transport services at greater risk. 2.2.5 The reduction in BSOG for community transport should therefore be considered in the round, taking account of the reductions in local government grant at the same time as changes to BSOG.

3. Implications of Free Off-Peak Travel 3.1 Free local bus travel is a life line for many in later life. It helps people to remain independent and access local amenities and services, and can be an important way to keep in contact with friends and family, helping to tackle social isolation. Age UK conducted research into the public’s views on a wide range of government spending that those aged over 65 benefit from. In response to the question, which two or three of the following benefitsiv are most important to protect from spending cuts, two in five (40%) of those aged 65 and over thought free bus travel was the most important to be protected.v Given the value many people in later life place on free bus travel, we would urge the Government to think very carefully before making any changes to eligibility. 3.2 We welcome the Transport Secretary’s remarks that the national concessionary scheme is enshrined in primary legislation and that the Prime Minister and Deputy Prime Minister have no plans to change it.vi Age UK welcomes this important commitment and were pleased to see this restated in the Spending Review. 3.3 Free bus travel has been a success and remains very popular with older people. In a survey undertaken in June 2008,vii 62% of those aged 60 or over living in England had received or registered for a concessionary pass. By July 2009 the figure for all of Great Britain had risen to 76%.

3.4 Its value to those who would otherwise be unable to travel locally to access services and visit friends is considerable. Passenger Focus undertook a survey in July 2009 that revealed that 39% of older pass holders made a greater number of local journeys by bus than before they obtained their pass.viii 14% of older pass holders also made more journeys outside of their local area compared to before the introduction of free national bus travel.

3.5 Age UK recognises these beneﬁts are set against spending of around £1 billion per year on the bus concession, which means some administrative savings are necessary. We support efforts to simplify the administration of travel concessions in order to reduce costs. Changes should only be to administration and not to the provision of bus services, the age at which individuals become eligible or to the universal nature of entitlement.

3.6 The Department for Transport has announced that it will look for administrative savings, by for example, shifting responsibility for the concession from district to county councils. The Under Secretary of State for Transport also recently announced that the government was looking at whether savings could be made through a more efﬁcient method by which travel concession authorities reimburse bus operators.

3.7 We support efforts to find savings in the following areas: 3.7.1 The way bus companies are remunerated. Bus companies should only be compensated for their costs in providing the service and should not make money out of the scheme, which is contrary to the Act. 3.7.2 The complexity of funding arrangements: There are four separate allocations (none of which is ring-fenced) and the grant formulae are complicated and obscure to the public. This all makes it is difficult for local residents to assess whether or not the money is being used properly. Many local authorities have argued that the grants they receive are not sufficient to meet the costs, including that which arises from tourists visiting the area. The complexity of the funding arrangements means it is very difficult to validate or challenge these claims. 3.7.3 The tier of local government: Most local authorities are in favour of the scheme being administrated at county council level, rather than at District level. However, consideration should be taken of the effectiveness of the bus service concession and local arrangements should not be automatically lost. For instance, in rural areas where districts have used their discretion to make the bus concession available at all times, rather than off-peak only, due to the small number of available services.

3.8 The universal nature of the bus concession should be protected. Age UK therefore opposes the idea of the concession being means-tested.

3.9 There are 11.7 million people in England aged over 60. If means testing were introduced and passes were only available to recipients of Pension Credit only 2.8 million people in England would qualify (the numbers could be slightly higher if recipients of Council Tax Beneﬁt and Housing Beneﬁt were included). Around 1 million people who are eligible and not claiming Pension Credit would not receive the concession. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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3.10 Councils have told us they are emphatically opposed to means testing free bus travel. They recognise the popularity of bus fare concessions for pensioners and wholeheartedly support them. The LGA commissioned an independent report to look at the issue of means testing, but concluded that it was not a way forward.ix

4. Taking into Account Passengers’ Views 4.1 Understanding the needs and experiences of passengers is a vital part of planning bus services as part of an integrated transport system. National and local government must take into account the needs and views of older people in all transport planning. 4.2 The Citizenship Survey 2009–10 showed that older people were less likely than younger groups to feel they could influence decisions locally and nationally. In addition research suggests that over 1 million people over 50 are socially excluded from society.x 4.3 The process of seeking people’s views needs to allow people to see the outcomes of their involvement. Older people need to be partners in planning and delivering better outcomes for local transport. As individuals and collectively there needs to be a framework for participation that allows communities to define the problem and work with local agencies to find the solution. December 2010

References i England–Wide Concessionary Bus Travel: The Passenger Perspective July 2009. ii Norman Baker MP, Parliamentary Questions 15 November. iii Commission for Rural Communities, State of the Countryside Report, 2010. iv The list of benefits that people were asked to choose from were: NHS treatment; the state pension; winter fuel payment; care for frail and disabled people; free bus travel; means tested benefits to cover rent and council tax; cash benefits for frail and disabled people; home repairs, adaptations and sheltered housing; post offices; none; don’t know. v Age UK and Ipsos MORI, Live Polling Results: Are we prepared for an ageing society? 2010. vi Commons oral answers Philip Hammond Secretary of State for Transport 22 July 2010. vii Office for National Statistics’ Omnibus Survey June 2008. viii England–Wide Concessionary Bus Travel: The Passenger Perspective July 2009. ix The LGA commissioned Oxera Consulting to produce an independent report on public subsidy of bus services, but rejected its findings (August 2009). x Age Concern. Out of sight, out of mind: social exclusion behind closed doors. 2007.

Written evidence from Stagecoach Group plc (BUS 10) 1.0 Introduction 1.1 Stagecoach Group plc welcomes this opportunity to contribute to the inquiry into Bus Services after the Spending Review and to present evidence to the Transport Committee. 1.2 The Spending Review is likely to have a signiﬁcant impact in many areas of the UK economy and bus services are likely to be affected both directly and indirectly. 1.3 Our views are given below in response to the questions the Committee has posed.

2.0 Stagecoach Group 2.1 Stagecoach Group has extensive operations in the UK, United States and Canada. The Group employs around 35,000 people and operates bus, coach, rail, and tram services. 2.2 In the UK, our ﬂeet of around 8,400 buses connects communities in more than 100 towns and cities across the country. We have been consistently highly placed in national UK Bus Awards in each of the last four years. 2.3 Two million passengers travel on Stagecoach bus services outside the capital every day, using a network stretching from south-west England to the Highlands of Scotland. We serve major cities, including Manchester, Liverpool, Newcastle, Shefﬁeld, Hull, Oxford, Cambridge and Exeter, as well as key shire towns and rural areas. We have also recently re-entered the London bus market with the acquisition of the East London and Selkent bus companies, which run 15% of the capital’s bus services. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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2.4 We operate a range of local scheduled services, express coach networks and school bus operations. Most of our services are operated on a commercial basis in a deregulated environment. We also operate contracts on behalf of local authorities and other organisations. 2.5 Since 2006 Stagecoach has invested £398 million in new state-of-the-art buses. This is part of a long- term commitment to improve our environmental performance and ensure all our vehicles are fully accessible to the elderly, disabled and families with young children. As part of our strong commitment to the safety and security of our passengers and our people, all our new vehicles are fitted with digital CCTV systems. 2.6 We also operate express coach services linking major towns within our regional operating company areas including the Oxford Tube connecting London and Oxford at high frequencies 24 hours per day, 365 days per annum. The Group runs the market-leading budget inter-city coach service, megabus.com, which carries over two million passengers a year on a network covering more than 50 locations and the bus/rail integration product, megabusplus.com. Scottish Citylink, our joint venture with ComfortDelGro, is the leading provider of inter-city express coach travel in Scotland. 2.7 Putting customers first is our priority. We continue to focus closely on the recruitment and training of our people, and we have one of the best records of any major operator for vocational training among our frontline drivers and engineers. Our UK Bus division is also a major employer, providing jobs for around 23,000 people at over 110 locations in our 19 regional companies. 2.8 Stagecoach Group is a major rail operator and has an involvement in running almost a quarter of the UK passenger rail network. The Group operates the East Midlands and South Western rail franchises, the latter incorporating the South West Trains and Island Line networks. South West Trains, the UK’s biggest commuter franchise, runs nearly 1,700 trains a day in south-west England out of London Waterloo railway station. In addition, Stagecoach Group has a 49% shareholding in Virgin Rail Group, which operates the West Coast inter- city rail franchise. 2.9 We also operate Supertram, a 28km light rail network incorporating three routes in the city of Sheffield, and have a 10-year contract to operate and maintain the Manchester Metrolink tram network. 2.10 We are committed to investing over £200 million in our rail franchises to improve the quality and range of our services. This has included station and car park enhancements, making ticket purchase simpler using smartmedia and ticket vending machines, depot extensions and rolling stock refurbishment.

3.0 The impact of the reduction in Bus Service Operators’ Grant, including on community transport 3.1 The government has announced that BSOG in England will be cut by 20% from April 2012 and will remain at that level for the following three years. We estimate that the Government spends around £318 million per annum, in England outside London; a 20% cut will therefore cost the industry approximately £64 million per annum. As part of its settlement with TfL, the government will also be making commensurate reductions in the capital. 3.2 In order to make good this deﬁcit, Stagecoach will need to increase fares by an additional 2.5% in order to recover the 2% anticipated loss in overall income. However, this funding cut is not happening in isolation. 3.3 Stagecoach is unable to comment on the impact on community transport.

4.0 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 4.1 Overall in 2009–10, local authority spending on tendered bus services in England outside London amounted to £547 million. At this stage, it is too early to say how local authorities will react to reductions in government funding. It is likely that they will react in different ways, depending on the funds they have available and their individual priorities. Local authorities also have a statutory duty to ﬁnance school transport for some scholars. The implication is that any service cuts will fall disproportionately on services which the authorities deem to be socially necessary. 4.2 Early indications, as reported in the trade press, conﬁrm this view. For example, in Somerset, councillors have agreed to cut their tendered bus service budget by 50%. Meanwhile Hertfordshire has indicated budget cuts of 23%, with a focus on services carrying less than 128,000 passengers per annum. North Yorkshire is currently consulting on a proposal that would cut tendered services on Sundays, Bank Holidays and in many cases in the evenings too and Bedfordshire has signalled 22% cuts, with 1/4 of the savings available for community solutions.. 4.3 While the scale of cuts will vary, it is clear that councils are focussing their reductions on the least used services, running at the least busy times. Given their limited use, these services are very unlikely to attract operators to run them on a commercial basis. Unless authorities can identify ways of providing alternative services employing the voluntary sector, as Bedfordshire seeks to do, it would seem that these services will be lost permanently. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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4.4 Government has withdrawn the Kickstart scheme which proved to be an effective way of launching new or improved bus services. As yet it has not announced whether or not there will be any replacement for this shared risk initiative. 4.5 DFT has continued to operate its green bus fund, which has encouraged operators to purchase hybrid buses, by funding the capital cost premium when compared with a conventional diesel vehicle. This initiative, while welcome, does not result in more bus services, but it does ensure the use of greener vehicles, which would otherwise be unable to generate a business case justifying their purchase. 4.6 The cuts in concessionary travel reimbursement described below, together with the reductions in BSOG will result in the reduction or termination of some services provided on a commercial basis. Local authorities will face the added challenge of deciding whether these services have a greater priority than their existing portfolio of secured services, which itself will be under threat for the reasons stated above.

5.0 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 5.1 The impact assessment accompanying the revised concessionary travel guidance published on 29 November, estimates a reduction in reimbursement to English bus operators of between £56 million and £102 million per annum. If correct, this represents between 80% and 160% of the impact of the reduction in BSOG payments to bus operators, but commencing one year earlier in April 2011. 5.2 Stagecoach and other bus operators do not agree with a number of the key conclusions that the Department for Transport has reached and continue to press for modification to the Guidance. The statutory requirement is that operators should be no better and no worse off than in the absence of the scheme. Stagecoach and many other operators believe that the Guidance is flawed and that they will be worse off. They also believe that the Department’s estimate of savings is seriously understated overall and in some individual cases the reductions in reimbursement to operators could be substantial leading to significant cuts in services, to the detriment of both concession pass holders and fare paying passengers too. 5.3 The Guidance also makes clear that it is for authorities to make their own arrangements for reimbursement and to take account of local evidence where appropriate. The impact will therefore vary by local authority area. 5.4 The impact of these changes is also much more difficult to predict. Should an operator and an authority fail to reach agreement, there is provision to appeal to the Secretary of State. However, past experience has indicated that appeal decisions usually take nine to 12 months to be determined, and operators must either sustain mounting losses in the intervening period or cut services. 5.5 The draft guidance proposed that new Regulations would allow the Secretary of State to reduce payments to operators, if he found that despite an appeal the authority was, in the Secretary of State’s view, over- reimbursing. 5.6 While the final guidance is silent on this point, merely indicating that new Regulations will be introduced during 2011, operators would appear to have the added risk that their appeal may result in even lower reimbursement, than the Authority proposed in the first instance. 5.7 It is likely that where operators face substantial reductions in reimbursement they will be unable to wait for an appeal determination of uncertain or negative outcome, and will have to either reduce services and/or increase fares to make good the shortfall in concessionary income immediately it arises. The scale of such changes will depend on the changes to reimbursement levels, which will vary between individual authorities. If an operator decides that such cuts are necessary, he will have to register his service changes with the Traffic Commissioner on 4th February, if they are to take effect on 1st April 2011.

6.0 How passengers’ views are taken into account in planning bus services, and the role of Passenger Focus in this area 6.1 We invite passengers continuously to give us comments on our services and any changes they would like to see made to them. Notices appear on every bus and increasingly feed back is received via e mail from our website. We also conduct telemarketing campaigns where we also seek customers and non users’ views on our service networks and performance. Together these responses give us continual feedback of our service performance and the perception of our networks. Results from our telemarketing surveys in 2010 show 86% of passengers satisfied with our standard of service, with between 81% and 87% satisfied each year since 2006. 6.2 In places where Bus Users UK or other bus users group are active, then we normally discuss our service proposals with them and invite their comments before implementation. 6.3 Significant service changes are also discussed with the relevant local authorities at the planning stage and consultations where needed, take place jointly. 6.4 Passenger Focus does not currently engage with us on the detail of any particular service change, although they are likely to take an interest in the procedures we use to consult passengers and how we obtain customer feedback. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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6.5 It should be noted that following their ﬁrst national bus passenger survey Passenger Focus reported in July 2010 that in 14 networks surveyed, overall satisfaction levels amongst 18.500 passengers varied between 84 and 92%. While leaving no room for complacency, Passenger Focus described these as a good set of results.

7.0 Summary 7.1 It is too early to predict the impact of the various CSR savings on bus services. It is however clear from the above that the combined effect of cuts in concessionary reimbursement in England outside London, reductions in tendered service budgets and of BSOG cuts are likely to amount to between £254 million and £441 million per annum. This equates to between seven and 13% of industry turnover, and is greater than the total profit margin of many operators. 7.2 We would expect that the Committee will be most interested in the cumulative overall effect of these changes. As we have indicated above, the impact will vary from authority to authority, depending on the reduction in concessionary reimbursement and the scale of reduction to its tendered service budgets. 7.3 The bus industry will inevitably respond with combinations of fares and service cuts which it will seek to implement in ways it believes will retain as many passengers as possible. 7.4 The Committee will be aware that increasing fares by more than inflation will yield less net income than the headline gross increase in fares, as some people will travel less as a result of the increase. Similarly, if services are cut, then passengers will be lost as a consequence, and the savings achieved will only be the direct costs of operation, unless the cuts are so large that depots are closed and the overhead can be saved too. There is debate concerning the values of the elasticities which apply to either of these actions, but a general rule of thumb would suggest that a 10% cut in public funding would necessitate a 10% increase in fares, coupled with a 10% cut in services, and would result in a 10% loss in passengers. 7.5 The state of the overall economy will also impact on the eventual outcome, since it will dictate overall levels of patronage, how much passengers can absorb in fares increases, and how many service cuts will be needed to remain in business and be able to invest in its renewal. 7.6 The UK economy faces enormous challenges. Cuts in bus services will reduce employment in the bus industry and also reduce investment in new buses, with consequent implications for the industry’s suppliers. Fewer and more expensive bus services for those who depend upon them may make it harder for those seeking employment to find and subsequently travel to work. In the long run, cuts in government funding will result in reduced bus patronage and increasing car use, outcomes which run counter to the government’s carbon and congestion reduction objectives. December 2010

Further supplementary evidence from Stagecoach Group plc (MCA 10a) 1.0 Introduction 1.1 The Committee has speciﬁcally asked for our views upon the following suggestion which it has received: “that bus operators could adopt a voluntary code of practice in respect of consultation procedures (when proposing signiﬁcant service changes)”.

2.0 Response 2.1 As the Committee is aware, we operate two types of bus service: commercial services, where we receive no subsidy from the Local Authority, and contracted services which the Local Authority deems to be socially necessary. 2.2 Commercial services are the core of our business and while the percentage varies from Company to Company, they tend to account for over 80% of our customers. We constantly look to develop these services and encourage more passengers to use them. We welcome customer feedback and we continually seek to ﬁnd ways of improving the offer we make to them. In this regard we seek to emulate the best research and marketing practice which may be found in the retailing sector. Our future success depends on how well we can meet our customers’ requirements in this sector of our market. 2.3 In circumstances where, despite our efforts, the performance of a commercial service necessitates review we will consult both the local authority and any local bus users groups concerning our plans, before taking any action. Our aim will always be to retain as many of our passengers as possible after any service revision has taken place. As indicated in oral evidence, we are also exploring ways of utilising social media to gain feedback, although this is currently in its infancy. 2.4 Changes to contracted services are the responsibility of the Local Authority which has decided to secure them. Ownership of the service rests with the Authority and therefore the need for any consultation concerning possible changes to be made is theirs too. If an Authority decides to retender a service on contract expiry, we cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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may not be the successful tenderer. Nevertheless, we are always willing to offer the Authority our views on how the service can be improved and will do so, both during contract operation and on expiry. 2.5 Circumstances sometimes arise where we ﬁnd it necessary to review commercial services comprehensively and we will agree with the Authority to jointly consult on changes to both these and their own secured services, so that a resulting integrated network of commercial and secured services results. 2.6 The above demonstrates that the circumstances necessitating any change to services will vary case by case. Consultation practice therefore varies from location to location and there is no one size ﬁts all solution. April 2011

Written evidence from Bus Users UK (BUS 14) Summary 1. Reduction in Bus Service Operators’ Grant: (1) 100% fuel duty rebate should be reintroduced. (2) We agree with the suggestion that loss of BSOG would have led to a 10% reduction in mileage and an average 10% fare increase. (3) The reduction of 20% in BSOG will not mean that the mileage reduction will be 20% of 10%, as it will still affect marginal services adversely. (4) Reduction in BSOG will be (more than) offset by a bigger demand for revenue support. (5) Fares increases will be reﬂected in reimbursement rates. 2. Impact of local authority grant support reduction: (1) Social impacts of service reduction. (2) Reduction in quality of service. (3) Risk to tendered services of concessionary reimbursements moving to higher tier. (4) Contradictions to other statements of Government policy. 3. Implementation and ﬁnancial implications of free off-peak travel: (1) Free travel welcomed; effects on modal shift. (2) Willingness of older people to contribute to bus fares. (3) Problem of well-used services failing to cover costs. (4) Unfairness when local services replaced by DRT. 4. Passengers’ views in planning bus services: (1) Too little consultation in bus service planning. (2) Role of Bus Users UK’s surgery programme. (3) Example of bus operator consultation. (4) Inconsistency of local-authority approach to consultation. (5) Dissatisfaction with service changes in Bath and Milton Keynes. (6) Challenge of achieving adequate consultation without overburdening bus operators. Bus Users UK is seriously concerned that passengers will suffer greatly from the combined effects of BSOG cuts, reductions in funding to local authorities and changes to the reimbursement for free off-peak travel. It seems likely that many of the more marginal bus services will be at risk, particularly if funding to local authorities is not ring-fenced. We are already seeing further threats to evening and Sunday services, often in areas where there is no realistic option to the bus for many passengers, typically younger and older people. The income from BSOG repayments, concessionary ticket reimbursement and tendered services has allowed many essential bus services to survive and substantial numbers of passengers stand to lose out if these measures are carried through.

1. The impact of the reduction in Bus Service Operators’ Grant, including on community transport 1.1 It has long been Bus Users UK’s contention that reimbursing the full amount of fuel duty on fuel used by bus operators would be wholly appropriate. Buses have the potential to contribute to so many desirable societal aims, including social inclusion, carbon reduction, improved mobility for the mobility-impaired, reduction of trafﬁc congestion, urban renewal, preservation of rural communities, educational opportunity etc, and it seems wholly inappropriate to add to the costs for users by taxing the fuel used. We feared that conversion of the rebate to a grant would be seen as public subsidy and make this concession easily expendable: this has proved to be the case. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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1.2 We would agree with Campaign for Better Transport’s assertion that the total loss of BSOG would have led to a 10% reduction in service provision and a 10% increase in fares, and fares are already rising faster than the rate of inflation. This particularly disadvantages those in low-income groups and on benefits and is a further disincentive to unemployed people finding work. A good, inexpensive bus service broadens employment opportunities and the converse is undoubtedly the case.

1.3 We are pleased to see the effect has been minimised by reducing BSOG by only 20% and giving two years’ notice for bus companies to adapt to the change. We anticipate that this smaller reduction will reduce the impact on fares, though it will not reduce the mileage reduction by only 20% of the anticipated 10% reduction. Many socially necessary and rural services are very close to breakeven and any small reduction in funding will tip the balance.

1.4 It should be noted that some of the more enlightened bus operators already see the beneﬁt of providing some mileage at the cost of the fuel and the driver in order to maintain a commercial network. Harrogate’s evening services were enhanced on this basis some years ago, and in our locality Abellio Surrey is currently providing evening/Sunday services on such a basis as a “use it or lose it” trial. Any reduction in income will mean that operators will be forced to withdraw such services and the cost to the public purse to replace such services will outweigh any saving in BSOG. In straitened times we have also seen a welcome move towards local authorities working with bus companies to create viable networks on minimal subsidy, rather than adopting the “purist” approach of tendering individual routes. Again removal of income from this equation is likely to result in whole routes having to be re-tendered and the overall public cost being greater than the savings in BSOG. Smaller, independent operators and those still owned by local authorities in particular run at small proﬁt margins and a small reduction in income is likely to have a major effect on such companies.

1.5 Fares increases arising from BSOG will also translate into higher reimbursements of concessionary fares, adding further to the cost on other aspects of the public purse.

1.6 Bus Users UK is essentially concerned with scheduled bus and coach operation and currently has little expertise in the area of community transport. We will therefore refrain from comment on that aspect of this section.

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

2.1 Quite clearly cuts in local authority support for bus services will lead to direct reductions in people using services. Hertfordshire County Council’s predictions for the reduction in usage of services in its area due directly to service reductions resulting from cuts in funding amount to 128,000 journeys a year. There is a social impact attached to every one of those journeys; it may be a lost employment or educational opportunity, it may simply affect the well-being of an elderly person no longer able to visit relations or take advantage of a shopping opportunity, and it may well be that the journey is replaced by a car journey. Scaling that level of journey reduction across the country would be a very inexact science, but it is clear that those social impacts multiplied across the country will be considerable, amounting to at least SIX million journeys lost.

2.2 Cuts in local authority funding can also result in service quality falling to an unacceptable level. Northamptonshire County Council’s insistence on covering the Northampton-Oxford service, withdrawn as unproﬁtable, at the lowest possible price has led to a severe degradation of service, with higher fares and even danger to life.

The commercial service was cut back to Northampton-Silverstone, and the rest of the service was provided by an underfunded link on a very low frequency using an inexperienced operator with old, unreliable buses and insufﬁcient running times. As a result, through passengers have to wait at Silverstone, where there are no proper waiting facilities, to continue their journey on a highly unreliable low-frequency service, and pay two fares. This especially affects journeys between Northampton and Brackley. The waiting facilities are a danger especially to lone female passengers after dark, and there are concerns amongst parents for students at the sixth-form college in Northampton having to wait there.

This is one speciﬁc situation, but is indicative of what can happen if there is insufﬁcient funding for local bus services.

2.3 We are also concerned at the fact that from next April concessionary fares and service support will come from the same local authority. Thus ﬁrst-tier authorities will increase their concessionary fare liability every time they tender a local service: and of course the converse is the case. This could lead to the irony of the most promising services not being put out to tender because of the impact on the budget for concessionary fares reimbursement.

2.4 There is an irony in the Secretary of State for Work & Pensions telling unemployed people to use the bus to access work opportunities at a time when service levels are under threat and fares could be forced up even further. Fares have risen by 30% above inﬂation in the last 15 years (DfT Statistics, Bus 0405b) as it is, cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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affecting adversely the most disadvantaged sector of society, and measures that will have the effect of driving that rise further will clearly create additional hardships in such socio-economic groups. Moreover one of the Department for Transport’s strategic objectives is, according to its website: “to promote greater equality of opportunity for all citizens, with the desired outcome of achieving a fairer society.” It goes on to say: “The Department is looking to enhance social inclusion and the regeneration of deprived or remote areas by enabling disadvantaged people to connect with employment opportunities, key local services, social networks and goods through improving accessibility, availability, affordability and acceptability.” Cuts to bus services at this time are entirely contrary to this “strategic objective”, could affect economic recovery and will adversely effect other priorities such as carbon reduction.

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 3.1 Naturally we welcome the introduction of free concessionary travel. It has opened up new travel opportunities to older people in particular. Research by Passenger Focus (“Englandwide Concessionary Bus Travel—The Passenger Perspective”, July 2009) confirms that the policy has been useful as a tool to create modal shift. It found 35% of journeys outside the local area by concession holders were by people who would previously have made the journey by car. It seems likely that much of this latter benefit could be lost by removing the free travel pass. 3.2 However we are frequently told by older bus users at our surgeries that they would prefer to pay a token fare to ensure their bus service was preserved. There is a recognition that the cost is high and that it is better to pay a small fare on a bus that is there than to have a free travel entitlement and no bus on which to use it. With more than 1.5 billion journeys undertaken by passengers with a concessionary pass in England in 2009–10 (DfT statistics Table BUS0105) a 50 pence per journey contribution could yield up to £750 million, although that figure would reduce with the resulting reduction in use. Reintroducing a charge is not desirable, but it could be a better alternative to service cuts. It might also encourage local authorities to tender services which would then yield revenue. 3.3 There have been cases of services carrying large numbers of pensioners yet failing; possibly the most well-known is Harrogate & District’s Harrogate-York service which failed through being so well-used by pensioners that the average income per passenger was insufficient to sustain the service. 3.4 One area of concern is the withdrawal of conventional bus services in rural areas and other places where public transport is marginal. We have recently been alerted to passengers having access to a conventional bus service withdrawn in rural Cumbria. Demand-responsive services have been cited as the answer for those left without a service, and were in this particular case: but apart from the inconvenience caused by the requirement to book your journey in advance, concessionary passes are not valid on these services. Thus passengers with passes find themselves having to pay for journeys that were previously free and which vary little in substance from parallel journeys made by other residents on conventional bus services for free.

4. How passengers’ views are taken into account in planning bus services, and the role of Passenger Focus in this area 4.1 There is little evidence of bus companies consulting passengers before introducing or changing bus services and Bus Users UK would welcome moves that would encourage consultation as part of the process. 4.2 Bus Users UK’s well-established surgery programme is a good forum for bus passengers to make their views known to operators and local authority officers. We are very willing for our surgeries programme to become part of a consultation process (and indeed this has already happened: a surgery was held in Staines in December 2009 as part of the first tranche of Surrey County Council’s recent consultation on bus service revision), as would structured focus groups with Bus Users UK acting as intermediary between operators/local authorities and passengers. Bus Users UK provides surgeries where requested (subject to our limited resource) and would be favourable to requests by local authorities (or operators) for surgeries to coincide with consultation on service revisions. 4.3 Some operators have undertaken consultation; Stagecoach Manchester for example consulted over the conversion of its Woodford/Bramhall-Manchester service 157 to the limited-stop X57, to good effect. 4.4 Local authorities vary in this respect, with some consulting to good effect (the first phase of Surrey’s review ended with a good outcome following public consultation and discussion with local operators). Somerset conversely is intending to make a £2 million cut in a county where 70% of bus services rely on local authority support without meaningful consultation of users. We understand too that Cornwall has accepted the value of its bus service and effectively scrapped proposals to reduce bus service funding. 4.5 We have recently become involved with highly dissatisfied bus users in Milton Keynes and Bath where bus service changes have been made, having a major impact on people’s lives, with no consultation, and in cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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both cases aspects of the previous network has had to be restored, though leaving passengers without the links they need for several weeks in the process. And of course when the link is restored irreparable damage has been caused. 4.6 We realise enforced consultation could create a further serious burden on operators, especially the smaller ones, and indeed we have recently, through Bus & Coach Buyer magazine (3 December 2010), challenged the industry to adopt a voluntary practice of consultation We also fear that allowing small-scale changes without consultation could create situations where bus services undergo major change by a series of small revisions, maximising disruption and uncertainty for passengers. This is not an easy situation to remedy, but people are ﬁnding their lives seriously disrupted by bus service changes of a magnitude which would not be allowed on rail without consultation: yet buses carry more than twice the number of passengers that trains do, including London Underground. December 2010

Written evidence from the Department for Transport (BUS 15) Impact of the reduction in Bus Service Operators Grant 1. We have previously said that the Bus Service Operators Grant (BSOG) helps ensure that, on average, bus fares are around 7% lower than they otherwise would be and bus service levels around 7% higher than they otherwise would be outside London. On the same basis, this would suggest a 20% reduction in BSOG might be expected to lead to around a 1% increase in fares and a 1% reduction in bus services outside London. 2. Using this analysis and the Department’s new National Bus Model (NBM) to estimate sub-national impacts, we have also estimated the following impacts outside of London following a 20% reduction to bus subsidy (note however that this reduction is less than the overall reduction in local transport revenue funding of 28%): Table 1 ESTIMATED APPROXIMATE AVERAGE IMPACT OF A 20% REDUCTION IN BSOG OUTSIDE LONDON Area Impact on fares Impact on services Impact on patronage* Metropolitan +2% −1% −1% Conurbations +1% −1% −1% Small towns +1% −2% −1–2% Rural +2% −2% −2–3% Average +1% −1% −1% Source: DfT analysis and modelling. * Impact assumes all else being equal eg no change in the cost of travelling by other modes of transport. 3. Although the above table provides estimates of the potential impact of the reduction in BSOG, as the bus market is deregulated outside London, it is up to commercial operators to decide what fares they set. In reaching their judgement on fare changes, bus operators will take account of a range of factors, not least the costs involved from increasing fares. The Confederation of Passenger Transport (CPT), who represents the bus industry, has suggested the reduction in bus subsidy could be absorbed without fares having to rise. 4. Bus subsidy payments are one element in a firm’s pricing decisions but are likely to be fairly marginal when considered in the context of an operator’s overall outgoings. A table showing the proportion of industry costs in 2007 and 2010 is given below. Table 2 ESTIMATED SHARE OF BUS COSTS Cost Share of costs in 2007 Share of costs in 2010 Drivers wages 48% 45% Other labour and staff costs 15% 15% Insurance and claims 3% 3% Fuel 9% 15% Maintenance materials 5% 5% Vehicle depreciation 6% 6% Other operating costs 12% 12% Source: Confederation of Passenger Transport cost index. 5. The table illustrates that the most significant costs include labour and other staffing costs. In contrast fuel represents 9–15% of total costs. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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6. Passengers in all areas may be affected by a reduction in bus subsidy. Given the relatively lower level of demand in rural areas, it may mean that, at the margin, it may no longer be profitable to run as many services in such areas following a reduction in bus subsidy. However, reduced subsidy will also affect those routes where running costs (in particular bus fuel costs) are relatively high. This could be in areas where bus routes are relatively long or where congestion is higher which will reduce a bus’s fuel efficiency. Congestion tends to be higher in urban areas. 7. Impacts on service levels can be offset by action from local authorities who may choose to increase expenditure on tendered services. Local authorities should work in partnership with operators and local communities to decide how best to provide access to services for residents where commercial services are not viable—this may mean tendered bus services, or it may be other more flexible services provided by the council or the voluntary sector eg dial-a-ride. 8. The Department has carried out an Equalities Impact Assessment on the planned reductions to bus subsidy. This analysis suggests that the following people tend to make relatively more bus trips—women relative to men, people aged 17–20 relative to people aged 30–59, ethnic minorities compared to White British people, people with mobility difficulties compared to people without mobility difficulties. They are therefore potentially more negatively affected by the reduction in bus subsidy. However, older and disabled people will be protected from changes in bus fares through the national concessionary travel scheme, which the Government has protected in the Spending Review. 9. The Department estimates BSOG to be on average high value for money with around £2 worth of benefits per £1 of BSOG spent, as well as additional non-monetised benefits such as greater accessibility, which is why the Government has reduced it by less than some other grants. The majority of the benefits of BSOG are from quicker and cheaper journeys for bus users (representing around 58% of the benefits of BSOG) and external benefits (representing around 27% including lower congestion and better environmental outcomes). The remaining benefits are estimated to fall to transport providers. However, to the extent that the reduction in bus subsidy can be “absorbed” by industry, this will help ensure that any wider costs resulting from the reduction in bus subsidy are minimised. 10. The Department’s assessment of the benefits of BSOG and the modelling of the impacts of the 20% reduction rely on assumptions about the competitiveness of the bus market. The Committee will be aware that the Competition Commission is currently undertaking an inquiry into the market for local bus services in the UK (excluding Northern Ireland and London). The Commission is due to complete the inquiry in autumn 2011.

Impact on community transport 11. There are at least 1,700 community transport organisations in England (CTA State of the Sector Report 2010) who offer transport services for those unable to access conventional public transport, whether this is because of location, personal circumstance or a lack of suitable (available) transport provided by commercial operators. 12. In 2009–10 £8.3 million was claimed in BSOG payments from 850 organisations operating services under a community transport permit. However, in a recent State of the Sector report, produced and published by the Community Transport Association, they suggest that of this total £3.7 million was claimed by 622 community transport groups (just over a third of the total number of community transport groups in England); the remaining was claimed by local authorities operating their own community transport services. 13. Whilst most payments to community transport groups are small in size (average claim per operator £4,200—CTA State of the Sector Report 2010), we do understand that they are an important and reliable source of funding and play a role in supporting socially necessary and rural transport services. 14. The planned reduction in BSOG from 2012–13 by 20% would see the average claim reduce by £840 to £3360.

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 Local Transport Funding Grant Simplification & Formula Grant 15. To support the localism agenda, as part of the Spending Review DfT has carried out a radical simplification and reform of local transport funding, moving from 26 grant streams to four from 2011–12: (i) a local sustainable transport fund (capital and revenue); (ii) major schemes (capital); (iii) block funding for highways maintenance (capital); and (iv) block funding for small transport improvement schemes (capital). 16. All other specific grants are ending,1 with the funding transferred and included in the main Local Government Formula Grant administered by the Department for Communities and Local Government. This 1 This excludes the few specific rail grants provided by the Department to local authorities cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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approach will give local authorities greater flexibility in how they spend their funding, enabling solutions tailored for the specific needs and circumstances of individual communities. This is crucial if they are to deliver effective and efficient transport for their communities at a time of limited resources.

17. DfT has established a £560 million Local Sustainable Transport Fund to invite local authorities outside London to bid for funding to support packages of transport interventions that support economic growth and reduce carbon emissions in their communities as well as delivering cleaner environments and improved air quality, enhanced safety and reduced congestion. The Fund will include a mix of £350 million revenue and £210 million capital funding over the next four years.

18. In addition, over the SR period DfT is providing over £3 billion for highways maintenance, over £1.5 billion for local authority major schemes, and contributing around a third of the funding for the £1.4 billion Regional Growth Fund.

19. DfT intends to provide over £1.3 billion over four years for small transport improvements. Integrated transport block funding is crucial to help local authorities improve road safety, stimulate local economies by reducing congestion, and deliver social justice to their local communities. Local authorities are free to use this funding to meet local priorities, for instance through investment in capital bus measures.

Concessionary Travel Reimbursement—New Guidance

20. The Department has issued new guidance for Travel Concession Authorities (TCAs) to use in deciding the level of reimbursement that bus operators should receive for carrying concessionary passengers together with an impact assessment.

21. The new guidance is designed to help TCAs estimate a level of reimbursement that leaves bus operators no better or no worse off than they would have been in the absence of a scheme.

22. The new guidance provides TCAs with a detailed methodology for calculating reimbursement in their area. The guidance and methodology cover the main issues in reimbursement—the number of trips that would have been made in the absence of the concessionary fares scheme; the average fare that would have been paid in the absence of the concessionary fares scheme; and the additional costs that operators incur due to carrying generated concessionary passengers. The guidance is based on extensive research.

23. The new guidance is designed to be simpler to use than the existing guidance because it reduces the scope for argument about factors that are not easily observable. It also addresses some of the speciﬁc problems of the existing guidance, for example deﬁnition and calculation of additional costs.

24. The guidance is not statutory. If TCAs think that a different method achieves a more accurate no better no worse level of reimbursement for their area, they are free to use it.

What effect does the new guidance have?

25. It was assumed that the new guidance would be applied by all TCAs in England outside London. Annual costs associated with the administration of concessionary fares schemes that are incurred by TCAs and operators were estimated to decrease once experience of the new guidance was gained. This amounts to £1.8 million pa. The number of appeals and the costs associated with appeals is estimated to rise initially and then fall back to current levels.

26. The effect on the overall level of reimbursement was estimated from an analysis of returns from 35 TCAs to a Department for Transport survey of reimbursement. These TCAs were reasonably representative of the geography and area type of all TCAs, but estimates based on this data should be treated as results from a sample rather than a complete census of TCAs.

27. The extent to which the new guidance will lead to a reduction in total reimbursement paid to bus operators depends on whether and how it will be applied by Travel Concession Authorities. The estimates of reimbursement also depend on assumptions about various aspects of the guidance and in particular the level of marginal capacity costs and the incidence of additional peak vehicle requirement costs. A range of costs were used in the calculations.

28. The average change in reimbursement compared with the existing level of reimbursement in the 35 sampled TCAs ranges from a saving of 9% to 16%. To estimate a time proﬁle of the absolute amount of saving requires an estimate of the total amount of reimbursement that would be likely in future years. This has been done using data on actual reimbursement from the survey of TCAs, and projecting this forward using population projections of different age groups, bus trips rates of different age groups and the effect of aligning eligibility for concessionary bus passes with the pensionable age for women. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Table 3 FORECAST OF TOTAL REAL SPEND ON CONCESSIONARY TRAVEL FOR OLDER AND DISABLED PEOPLE: ENGLAND EXCLUDING LONDON (£MILLION 2008-09 PRICES) 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18 2018–19 2019–20 2020–21 £643 £639 £637 £636 £635 £633 £632 £630 £626 £606 £599 Source: DfT analysis. 29. Applying the % savings noted above to the forecasts in Table 4 gives an average annual change in reimbursement over the period 2011–12 to 2020–21 in the range £54 million to £100 million pa, with a best estimate of £77 million pa.

Range of Impacts 30. The percentage impacts noted above are calculated from the 35 TCAs surveyed. Within that sample there is a wide range in the saving from that actually paid in 2008–09. And it is likely that across all TCAs there will be a range in the change in reimbursement. In TCAs with high reimbursement factors the change in reimbursement using the guidance could be large. In TCAs that have lower reimbursement factors and allowance for additional costs in their existing methods the change could be much smaller.

Second round effects 31. The change in reimbursement could have second round effects through the reaction of operators. We have not carried out detailed modelling of these reactions but in principle they could comprise all or some of the following: — Change in bus operator proﬁt. — Change in fares. — Change in service levels. 32. In turn changes in fares and changes in service level could have an effect on passengers. Taking the changes in reimbursement calculated above, and pro rating those changes to a previous analysis of the impacts of changes in BSOG, it is estimated that changes in fares and service levels could lead to a reduction in trips in the range of 1 to 2%. If operators made changes in fares and service levels then the ﬁnancial impact of a change in reimbursement would be reduced from a range of £54 million to £100 million pa to a range of £10 million to £21 million pa.

Rural areas 33. During the consultation on the reimbursement guidance concern was expressed about the impact on rural bus services. The revised guidance will affect the calculated reimbursement for rural bus services, by making special provision for infrequent services, by emphasising the criteria that allows small operators to be treated separately, by calculating the reimbursement factor by reference to the operators own fare, and by allowing the payment of marginal capacity costs on all routes.

The Implementation and financial implications of free off-peak travel for elderly and disabled people under the Concessionary Bus Travel Act 2007 The Scheme 34. The introduction of free off-peak concessionary bus travel throughout England from 1 April 2008 gave the opportunity for greater freedom and independence to around 11 million older and disabled people in England. The concession guarantees free local bus travel for those eligible from 9.30am until 11pm on weekdays, and all day weekends and bank holidays. 35. The Coalition Government is committed to protecting the concessionary bus travel scheme—we made this clear in the Coalition Agreement and the Chancellor reconfirmed this commitment in the recent Spending Review. This is why we are focusing our efforts on assisting local authorities to find efficiencies through reforms to the administrative and reimbursement arrangements for the scheme rather than cutting back on the entitlement.

The Pass 36. The move to England-wide travel required the introduction of a single national bus pass. With help and funding from the Department for Transport, local authorities throughout England have issued over 10 million ITSO smartcard passes for concessionary travel. ITSO is a national smartcard speciﬁcation which has been developed by industry and the Department for Transport. 95% of passes were produced and over 80% of passes were sent out to concessionaires by the start of the concession on 1 April 2008. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Administration 37. Responsibility for administering concessionary travel lies with Travel Concession Authorities (TCAs)— currently district councils, unitary authorities, PTEs and London Boroughs. From April 2011 responsibility for administering the scheme will move from lower tier local authorities (such as district councils) to upper tier local authorities (such as county councils). 38. This reform will assist in overcoming a number of problems that have been identiﬁed by local authorities, stakeholder groups and operators. As well as providing economies of scale, it will for example enable the number of negotiations with bus operators to be reduced and align responsibility for concessionary travel with Transport Authority responsibilities. 39. Local authorities are responsible for determining reimbursement that leaves bus operators “no better, no worse off” as a result of the concession. Operators can appeal to the Secretary of State if they feel they are being inappropriately reimbursed.

Funding 40. Around £1 billion is spent on concessionary travel each year. Before April 2008, funding for the statutory minimum bus concession was provided exclusively through DCLG’s Formula Grant system. In the three years since April 2008 local authorities have also received additional Special Grant funding administered by DfT for the England-wide extension to the concession. Additional funding of £212 million, £217 million and £223 million has been provided to local authorities. 41. The special grant mechanism was the clear preference of local government stakeholders. The DfT consulted widely to develop a distribution mechanism that would target funding to those areas that were likely to experience the greatest increase in costs. However it is worth pointing out that the precise distribution of actual costs was simply not knowable in advance. 42. The preferred formula used distributed funding based on the eligible local population, visitor numbers, retail floor space and bus patronage. As such it was expected to take account of likely demand in areas such as coastal towns, urban centres and other places likely to experience an increase in bus journeys as a result of the improved concession. 43. Following the first full year of the England-wide concession, the Department for Transport carried out a review of the additional costs incurred by TCAs. This suggested that the £212 million of funding was more than sufficient in total and that, in the main, the formula distribution had been largely successful. However a minority of authorities—around 30 out of over 260—were experiencing significant shortfalls. This had potentially severe implications for their ability to deliver local services and the Department took the view that we could not persist with the original distribution. 44. In 2009, the Department for Transport consulted on a revised distribution of special grant funding for 2010–11. The majority of the respondents to the consultation were either in favour or had no opinion on the proposed revised distribution. 22% of TCAs opposed the revised distribution. 45. The new distribution was developed in the light of hard evidence on where the costs of the new concession have actually fallen. This is evidence that was not available to us in 2008, and which we could only anticipate, in developing the original special grant distribution.

Future Funding 46. The special grant funding previously provided by the DfT was only intended to cover the period from 2008–09 through to 2010–11, while the England-wide extension to the concession bedded in. In line with the reduction in separate funding streams to local authorities, from April 2011 all funding for the scheme will be provided through formula grant. 47. CLG recently consulted on how the transfer of responsibility for concessionary travel (from lower to upper-tier local authorities) will be taken into account in authorities’ funding allocations from 2011–12. This was an opportunity for local authorities to influence decisions on the final distribution method. 48. The overall amount of funding available for local government was set out in the Spending Review. CLG will publish details shortly on the outcome of their formula grant consultation and on how the overall funding pot will be distributed among authorities. Formula Grant is allocated on the basis that the level provided overall is sufficient to enable local authorities to deliver effective local services, whilst ensuring that authorities do not set excessive council tax increases.

Pass Take-up and Usage 49. The proportion of older people with a concessionary bus pass increased following the introduction of a statutory minimum bus concession in 2001. 50. From 1998–00 to 2002 take-up rates among men 65+ and women 60+ increased from 49% to 58%. The equalisation of the eligible age in 2003 led to an increase in the average take-up among those aged 60+, from cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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52% in 2002 to 56% in 2003. It remained at this level up to 2005. There was a further increase in take-up in 2006, to 63%, associated with the introduction of free local concessionary bus travel in England and this increased again in 2007 to 68%, in 2008 to 73% and in 2009 to 76%.

51. There was considerable variation between area types in 2009 with take-up ranging from 63% in rural areas to 88% in London. However, this gap is narrowing as, over time, take-up has increased more among rural residents than in other areas.

52. Although the National Travel Survey is not explicitly designed to measure short term trends in travel patterns, data on the frequency of local bus use by people aged 60+ strongly suggests there may have been an increase in bus use among this group, corresponding to the increase in concessionary pass take-up.

53. The proportion of people aged 60+ who said they use a local bus at least once a week increased from 28% in 2005 to 39% in 2009. Over the same period the proportion of people in this age group who said they use a bus less than once a year or never fell from 46% to 31%.

Role of Passenger Focus in Route Planning

54. Around 80% of bus services outside London are operated on a commercial basis and route planning is principally a matter for the operator concerned, based on its assessment of passenger demand. An operator must give 56 days notice to the Traffic Commissioner of any changes to a route. Outside London, an operator must register a local bus service with a Traffic Commissioner, normally providing 56 days’ notice.2 This application must be copied to the relevant local transport authority. The Traffic Commissioner must accept all properly completed applications to register services from licensed operators, although traffic regulation conditions can be attached to the operator’s licence under certain circumstances (eg on grounds of safety or to prevent local congestion or pollution), which may restrict routes, stopping places and timings and frequencies. Services must be run exactly as registered. Each Traffic Area office publishes details of local bus registrations that have been registered, varied or cancelled in a booklet called “Notices and Proceedings”, which comes out every fortnight.

55. There is no formal method by which a local bus service registration can be objected to. However, VOSA guidance strongly suggests consulting with the police and the local transport authority before registering a service in order to avoid restrictions being applied by the authority or the Trafﬁc Commissioner.

56. Passenger Focus’ role is to build a strong evidence base about existing and potential passengers’ priorities and perceptions. It uses robust research evidence and the views of passengers to advise decision makers about issues affecting passengers and seek improvements. We would not expect Passenger Focus to become formally involved in decisions on individual bus routes.

57. On a more general note, the Committee will be aware that the role of Passenger Focus is currently being reviewed as part of the wider public bodies reform process. In October we announced that Passenger Focus will be retained, but substantially reformed to focus on the core role of protecting passengers while reducing costs to taxpayers. December 2010

Annex

SUPPLEMENTARY INFORMATION

This annex contains supplementary statistical information that the Committee may find useful. — The following tables show operating costs, operating revenues, fares and support for the bus industry in Great Britain. — London buses operate under a different model to the rest of the country, therefore comparisons between London and other areas require caution. — The final table (showing revenue by source) takes data from multiple sources and reflects complex funding flows. These figures are estimates and should be treated as such. — All cost and revenue figures for years prior to 2009–10 are adjusted for inflation in the wider economy, using the GDP deflator, and are expressed in 2009–10 prices. — All of these tables are published on the DfT website alongside a range of other statistics: http://www.dft.gov.uk/pgr/statistics/datatablespublications/public/bus/ 2 In “Improving Bus Passenger Services through the Regulatory Framework”, we consulted on requiring operators to give local authorities an additional 14 days’ notice. No decision has yet been taken on whether to implement this proposal. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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ANNUAL OPERATING REVENUE2 (AT 2009–10 PRICES1) ON LOCAL BUS SERVICES BY AREA TYPE, GREAT BRITIAN 2004–05 TO 2009–10 £million English English non- Financial metropolitan metropolitan Great Year London areas areas England Scotland Wales Britain

2004–05 1,716 1,207 1,624 4,547 516 179 5,242 2005–06 1,811 1,225 1,738 4,774 553 197 5,524 2006–07 1,844 1,226 1,879 4,949 603 192 5,744 2007–08 1,894 1,244 1,954 5,092 634 198 5,924 2008–09 1,932 1,261 2,051 5,244 941 207 6,092 2009–10 1,928 1,291 2,134 5,353 626 213 6,192 1 Adjusted for inflation using GDP deflator. 2 “Operating revenue” includes Bus Service Operators Grant, concessionary fare reimbursement, tendered service contracts, other public transport support to operators and passenger fare receipts. This definition aims to exclude streams of bus operator revenue not directly related to the provision of local bus services (eg income from advertising, private hire work, etc) Source: Department for Transport Public Service Vehicle Survey, Transport for London. LOCAL BUS FARES INDEX BY AREA TYPE, GREAT BRITAIN (AT CONSTANT PRICES2) 1995 TO 2010 March 1995=100 English English non- metropolitan metropolitan Great Year1 London areas areas England Scotland Wales Britain 1995 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1996 101.8 102.7 102.0 102.1 100.4 98.9 101.8 1997 102.8 105.9 104.4 104.4 105.1 100.4 104.5 1998 103.3 107.6 106.0 105.7 109.9 103.8 106.3 1999 105.4 110.2 109.1 108.3 112.1 106.7 108.9 2000 102.5 112.0 111.3 109.1 111.8 110.9 109.6 2001 101.1 115.4 114.7 111.2 112.5 114.3 111.5 2002 97.0 119.3 118.6 112.9 112.6 118.1 113.1 2003 94.4 119.8 120.5 113.0 112.2 118.4 113.2 2004 97.7 122.4 123.3 115.9 110.5 120.6 115.5 2005 109.0 125.2 125.4 121.2 110.3 122.0 119.8 2006 112.5 133.9 132.0 127.5 112.7 124.2 125.6 2007 118.4 128.2 119.0 121.7 111.2 124.6 120.4 2008 108.8 129.5 120.8 120.4 111.0 126.0 119.4 2009 117.9 141.4 129.1 130.1 122.9 134.8 129.2 2010 127.1 136.5 125.2 130.4 120.3 131.8 129.1 1 index as at March. 2 Adjusted for inflation using the RPI market price deflator. Source: DfT Fares Survey. ANNUAL OPERATING COST2 (AT 2009-10 PRICES1) ON LOCAL BUS SERVICES BY AREA TYPE: GREAT BRITAIN OUTSIDE LONDON 2004–05 TO 2009–10 £ million Great English English non- England Britain Financial Metropolitan metropolitan outside outside Year London3 areas areas London Scotland Wales London 2004–05 .. 971 1,346 2,316 449 117 2,882 2005–06 .. 1,027 1,412 2,440 454 130 3,024 2006–07 .. 1,124 1,567 2,692 509 144 3,344 cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Great English English non- England Britain Financial Metropolitan metropolitan outside outside Year London3 areas areas London Scotland Wales London 2007–08 .. 1.100 1,584 2,683 521 135 3,340 2008–09 .. 1,089 1,642 2,731 543 150 3,424 2009–10 .. 1,131 1,667 2,798 560 138 3,497 1 Adjusted for inflation using GDP deflator. 2 Operating cost includes administration and depreciation. 3 Buses in London operate under a different regulatory model to the rest of the country, and comparisons on an operating cost basis between London and the rest for the country would have little meaning. London figures are therefore excluded from this table. Source: Department for transport Public Service Vehicle Survey, Transport for London. ESTIMATED OPERATING REVENUE1 FOR LOCAL BUS SERVICES IN ENGLAND (AT 2009–10 PRICES7), 2004–05 TO 2009–10 £ million Gross Public Bus Service Total estimated Area/Financial Passenger fare Transport Concessionary Operators operating Year receipts2 Support3 Travel4 Grant5 revenue1 England 2004–05 2,543 1,056 556 393 4,547 2005–06 2,703 1,134 533 403 4,774 2006–07 2,607 1,169 779 394 4,949 2007–08 2,649 1,191 842 410 5,092 2008–09 2,589 1,285 940 430 5,244 2009–10 2,724 1,228 970 430 5,353 London6 2004–05 822 628 163 103 1,716 2005–06 876 662 168 106 1,811 2006–07 903 663 174 104 1,844 2007–08 911 691 184 108 1,894 2008–09 896 737 184 115 1,932 2009–10 941 692 183 112 1,928 English Metropolitan areas 2004–05 743 118 243 103 1,207 2005–06 777 130 212 106 1,225 2006–07 712 140 270 104 1,226 2007–08 718 140 277 109 1,244 2008–09 711 142 293 115 1,261 2009–10 714 137 310 129 1,291 English non-Metropolitan areas 2004–05 977 309 150 187 1,624 2005–06 1,051 342 154 192 1,738 2006–07 992 366 334 187 1,879 2007–08 1,020 359 382 193 1,954 2008–09 982 406 463 200 2,051 2009–10 1,069 399 477 189 2,134 1 Excludes capital receipts, and other streams of bus operator revenue that are not directly related to the provision of local bus services (eg income from advertising, private hire work, etc) 2 Only includes fare receipts retained by bus operators. On some tendered or supported services, fare receipts are passed to the local authority. 3 Public Transport Support is the total of all local authorities’ gross costs incurred in support of bus services, either directly or by subsidies to operators or individuals. The bulk of these costs will be accounted for by payments to operators providing tendered or supported bus services (including non-local services in some cases). However, the figures also include administration costs and some inter-authority transfers, meaning that a small proportion of the sums shown will not reach bus operators. In London it will also include depreciation on capital. 4 Concessionary Travel is the total authorities’ net costs of statutory or discretionary concessionary bus travel. Discretionary concessionary travel is decided by local authorities, and can include travel for those not included within the statutory concession, travel within the peak, or travel on other modes. These figures exclude ravel on the London Underground, Mersey Ferries and Rail, West Yorkshire PTE Rail and Light Rail Systems, cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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however they do include taxi tokens. Although gross local authority costs would normally be the best measure of operators’ revenue, net costs have been used in preference to gross costs in this table. This is because the latter figures include substantial double-counting as a result of inter-authority funding transfers, where one local authority administers a concessionary travel scheme on behalf of several others. The figures include administration costs, meaning that a small proportion of the sums shown will not reach bus operators. 5 Bus service Operators Grant (BSOG) is a subsidy provided by Central Government to operators of local bus services. The distribution of BSOG payments between English Metropolitan areas and English non- Metropolitan areas is an estimate. 6 London runs an entirely tendered market and therefore some comparison with the rest of country should be treated with care. For example concessionary travel is available on other modes than buses. Concessionary Fare Reimbursement in London includes funding from London Councils, received through special Grant. The figures are supplied by London Councils and will not necessarily equal RSG Funding plus London Councils’ Special Grant. 7 Adjusted for inflation using GDP deflator. Source: DfT Public Service Vehicle Survey, CLG RO forms, DfT BSOG returns, London Councils.

Written evidence from the Campaign for Better Transport (BUS 17) Campaign for Better Transport is concerned that bus services face three separate cuts in funding support following the spending review. The combined effects could together push services into a spiral of decline. This could particularly affect more vulnerable groups in society and damage the Government’s agenda to cut carbon and support strong local economies.

1. Cuts in Local Authority Revenue Grants and End of Rural Bus Subsidy 1.1 The cuts to local authority revenue funding and the end of the rural bus subsidy are already having an effect on local authorities’ support for bus services. We are collating more and more examples of local authorities cutting back support for bus services, particularly in rural areas (we can share this with the Committee if that would be useful—Passenger Focus also have evidence from local authority cuts to services). 1.2 For example, Somerset County Council have approved cuts to bus subsidies that they predict will lead to a 50% reduction in bus services across the county, with severe impacts on rural isolation and local businesses.3 And in North Yorkshire, the Business and Environmental Services directorate has to ﬁnd savings of £10.2 million out of its total budget of £69 million before March 2015.4 As a result the Council is proposing to withdraw all franchised evening, Sunday and Bank Holiday bus services to make savings of £600,000. Despite an overwhelming negative response to the public consultation, councillors have approved the plans.5

2. Changes to Concessionary Fare System 2.1 The draft concessionary fares reimbursement guidance, which the Department for Transport consulted on in the Autumn, contained a number of proposals that could have affected bus services. In particular, the changes to guidance threatened to reduce reimbursement for longer-distance rural routes and services in urban areas outside the metropolitan areas. 2.2 Campaign for Better Transport wrote to Norman Baker to express our concerns. His response and the subsequent revised guidance, has addressed some of these points. However, the changes are still likely to lead to a cut of £54 to £100 million to the budget for reimbursing operators for the journeys taken by statutory concessionary bus pass holders.6 The Department for Transport estimate that, if the guidance is applied by all local authorities responsible for the concessionary scheme, it will still result in 1.8% fewer trips. 2.3 Passenger Transport Executives (PTEs) are also going to face particular challenges on concessionary funding. In metropolitan areas, the local authority revenue support grant is received by the metropolitan districts (who are not the reimbursement authority for concessionary fares) and the relevant PTE will have to recoup funding for the concessionary travel scheme from the districts via their levy process, which is based on per capita payments. PTEs are concerned that this process is not sophisticated enough to allow for funding and costs to be matched. Metropolitan districts may also not be clear about how much of their revenue support grant is related to concessionary fares, and may as a consequence use this funding for other areas of expenditure and not pass it on the PTE. 2.4 One effect as a consequence in metropolitan areas may be that non-statutory concessions are withdrawn as budgets come under pressure, alongside cuts to PTE-funded non-commercial services. 3 2011–12 to 2013–14 Medium Term Financial Plan: Summary of Service Proposals, Somerset County Council 4 North Yorkshire County Council, 2010, http://www.northyorks.gov.uk/index.aspx?articleid=14262 5 York Press, 2 December 2010, http://www.yorkpress.co.uk/news/8715631.Backing_for_North_Yorkshire_bus_cash_cuts_ despite_objections/?ref=rss 6 Local Transport Today, Rural Bus Fears Prompt Revision to Concessionary Fare Guidance, 10/12/2010, http://www.transportxtra.com/magazines/local_transport_today/news/?id=25146 cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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3. Future Impact of Cuts to Bus Service Operators Grant 3.1 The third blow to bus services will be the cuts to bus service operators grant (BSOG) of 20% from 2012. If this is combined with moves away from being based on mileage, it is likely to again affect rural bus services more. 3.2 The Department for Transport estimate that the 20% cut to BSOG could result in: — Fares increases and service mileage reductions of around 2% in rural areas. — Fares increases of around 1% and service mileage reductions of around 2% for small towns. — Fares increases and service mileage reductions of around 1% for larger non-metropolitan towns. — Fares increases of around 2% and service mileage reductions of around 1% in metropolitan areas.7

4. Network Effects 4.1 Although the cuts in services outlined above may seem relatively small in isolation, the combined impacts are likely to be greater. Cuts to evening, weekend and connecting services can have knock-on effects. For instance, bus passengers could be unsure that they can get a return bus home and so instead take a car or not make that trip in the first place. Cuts to less used services, such as those linking housing estates, may also impact on more well used routes to town centres, with those feeder routes no longer providing passengers onto those services. 4.2 The combined effect may therefore be much greater, particularly if there is a decline in fare paying passengers if the economy does not recover. The overall network of bus services could therefore be weakened, leading to a cycle of decline for bus services. While some bus operators have said to Ministers that they can manage the cuts in BSOG, it could well be the situation that they can profitably manage decline but the opportunity to grow passenger number is lost, with the loss of wider benefits from reducing carbon from transport and providing access to employment and services which support strong local economies. 4.3 Cuts to integrated transport block funding to local authorities from the Department for Transport will also make it more difficult to develop infrastructure measures to support passenger growth, such as bus priority measures or improvements to bus stops and bus stations.

5. Impact on Groups in Society 5.1 Cuts in bus services are particularly likely to affect more marginalised or vulnerable users. Bus services are important to the following groups in society. 5.2 Young People need affordable bus services8 in order to give them a chance to take up opportunities in education and work, and to take the first steps to independence. One in five students has considered dropping out of further education because of financial cost, and transport is the greatest cost of participation9. 5.3 Older people have benefitted from free bus travel in ever growing numbers,10 however bus cuts could mean that concessionary pass holders could end up with no buses to get on. Many older people would be cut off from social activities, health services and shops. 5.4 People on low incomes will be disproportionately negatively affected, contrary to the government assertion that cuts would not hit the poorest hardest. Poorer people are less likely to have a car.11 Some children from poor families are put at further disadvantage because their parents can not afford bus fares to get them to colleges and services.12 5.5 Jobseekers in the Welsh town of Merthyr were told by Iain Duncan Smith to get on the bus to Cardiff.13 However, evidence gathered by Citizens Advice Bureau and Campaign for Better Transport show that many people who want to work are unable to take jobs, or are forced onto benefits, because of insufficient and expensive bus provision.14 Over all a third of jobseekers say poor transport options is the biggest barrier for them finding work. 7 Hansard, 2 November 2010, c702W 8 UK Youth Parliament, Fares Fair, 2009 http://www.ukyouthparliament.org.uk/public_transport/images/Fares%20Fair%20Report%20low%20res.pdf 9 Social Exclusion Unit, Making the Connections: Final Report on Transport and Social Exclusion, 2003 http://www.cabinetoffice.gov.uk/media/cabinetoffice/social_exclusion_task_force/assets/publications_1997_to_2006/making_ transport_2003.pdf 10 DfT, National Travel Survey, 2010 http://www.dft.gov.uk/pgr/statistics/datatablespublications/nts/age-concessionary/nts0619.xls 11 While the data used is from 2003, it is the first listed research report used to support the 21st Century Welfare White Paper. http://www.dwp.gov.uk/consultations/2010/21st-century-welfare, cited in Equality, Work and Welfare, Campaign for Better Transport, 2010 http://www.bettertransport.org.uk/system/files/Transport_social_equality_welfare_work.pdf 12 PTEG, Report on the Effect of Bus fare Increases on Low Income Families, 2010 http://www.pteg.net/NR/rdonlyres/EDDAC371- E793–4B3E-8A01–06EB32EC3C17/0/Effectofbusfareincreasesonlowincomefamilies.pdf 13 BBC, Iain Duncan Smith tells Merthyr jobless to “get on bus”, Oct 2010, http://www.bbc.co.uk/news/uk-wales-11605318 14 Equality, Work and Welfare, Campaign for Better Transport, 2010 http://www.bettertransport.org.uk/system/files/Transport_ social_equality_welfare_work.pdf cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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5.6 Local businesses rely on buses. Shoppers travel by buses, particularly to the high street15 meaning that poor bus provision is a barrier for local economic growth and supporting town centres rather than out of town shopping centres. 5.7 Disabled people use buses more often than non-disabled people, and are less likely to have the choice to take a car.16 Cutting bus services can mean cutting peoples only independent access to transport. 5.8 Rural communities suffer from buses that are often infrequent, expensive, and in some areas non- existent, causing isolation and suffering for many. People who fall into one of the above bus user groups who also live in the countryside are doubly disadvantaged.

6. Recommendations for Government and Local Authorities Consultation 6.1 We support the work that Passenger Focus is doing to encourage local authorities to properly engage with local communities when planning cuts to services so that consultation is meaningful and the worst impacts of cuts can be minimised. The Department for Transport should not just say that this is a local issue but should make clear to local authorities and bus operators that they expect meaningful consultation with local communities when cuts are planned.

Tendered services and quality contracts 6.2 With cuts to commercial routes likely, there may be particular pressure on local authorities to pick up bus services at a time when their own budgets are being cut. There is a need to disseminate best practice in commissioning services to maximise outcomes whilst reducing costs, as the Competition Commission have started to recognise in their study on the bus market. As part of this, local authorities should be looking at their transport spending in the round, including looking to pool budgets across different departments, such as education, social services and transport. HCT have published some ideas on better commissioning of services, which should provide a useful catalyst for debate.17 6.3 Additionally, local authorities should consider whether quality contracts can allow them to get best value for money from bus services. Local authorities could look at innovative uses of the Local Transport Act 2008, which allows authorities to move to quality contracts. The Act could be used to designate all services outside commercial routes as part of a quality contract and authorities could invite bids from a wide range of sources to run this non-commercial network. This could include other transport services including special needs, education, social services etc. Such a contract would give local authorities more say over what happens and potentially bring in a broader range of providers with greater competition to win a more signiﬁcant contract, which could help bring down costs for supported services. 6.4 A broader range of providers could include social enterprises and community transport, who may be well placed to provide services that provide wider social value. Cuts to community transport could be an easy option for local authorities looking to reduce their short-term costs, but this could be a false economy leading to higher long-term costs.

Partnerships 6.5 Another route for securing the future of bus services is to develop partnerships between operators and a local authority. Many authorities have put in place voluntary partnerships involving single routes but few have developed partnerships covering a broad area, partly due to concerns about the impact of competition law on bus operators co-operating together. Campaign for Better Transport has been involved in promoting an area wide quality partnership in St Albans. Chaired by our Chief Executive Stephen Joseph, the St Albans quality network partnership brings together four bus operators, two train operators, the city and county councils as well as the University of Hertfordshire. This has helped cooperation between operators in the public interest (consistent with competition law) to help grow the market despite the economic downturn. The partnership has also helped lever in new funding sources, including Growth Area Funding from the city council, Green Bus funding via one of the operators and integrated transport block funding from the county. It also means that the partnership is well placed to look for developer contributions with new housing growth or the potential for funding from the local sustainable transport fund.

Integration of buses with taxis 6.6 In other European countries, buses and taxis are better integrated and taxis are treated as part of a wider public transport network.18 We believe that the option of franchising taxi services as part of a rural public 15 Confederation of Passenger Transport, The Value of Buses to the Economy, 2010 http://www.cpt-uk.org/_uploads/attachment/ 1515.pdf 16 Disabled Persons Transport Advisory Committee, 2009 http://dptac.independent.gov.uk/pubs/research/apt/pdf/apt.pdf 17 HCT Group,Innovation in transport procurement: seven big ideas to beat the public spending crunch, http://www.hctgroup.org/_ uploaded/File/100223%20innovation%20in%20transport%20procurement.pdf 18 http://www.bettertransport.org.uk/system/ﬁles/Rural+Transport+futures+summary.pdf cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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transport network should be examined and a pilot funded in a county, as previously proposed by the Commission for Integrated Transport.19

Tax relief 6.7 The Government should also look at options for tax-free employer-provided transport vouchers as means of getting new funding into buses. Such vouchers or similar concessions are now used in many countries, including the US, Spain, Hungary, the Irish Republic and Brazil, and many European countries treat commuting as a tax free beneﬁt. Campaign for Better Transport is developing some more detailed work on the applicability of such schemes to the UK. December 2010

Further written evidence from the Campaign for Better Transport (BUS 17a) Campaign for Better Transport makes this contribution in addition to and not replacing our previous submission made to this inquiry dated December 2010. Since our original submission we have been able to obtain a clearer picture of the way that the reductions in local authority settlements are having an impact on funding for bus services across the country. Further, we wish to submit two pieces of research prepared by Campaign for Better Transport, evidencing the value of buses to society, to the economy and to the environment.

A National Picture of Cuts to Local Authority Support for Buses Campaign for Better Transport has been tracking cuts to bus services and estimates that 70% of local authorities are already looking to buses as an area to make savings, with some councils planning to lose all their supported bus services and 13 councils proposing to reduce support by more than £1 million. This trend is expected to continue and worsen. Our interactive online map20 is an endeavour to keep track of local authority proposals and decisions regarding buses and to make transparent the extent of the cuts on a national scale. This is a fast changing picture and we are soliciting information and data from a variety of sources. Socially necessary services that are not commercially viable are, by definition, not busy profitable routes. They are disproportionately found in rural areas, or comprise of Sunday, evening or bank holiday services. Although on average just over 20% of buses receive local authority subsidies, in some rural areas the figure can be near to 100%. For example, Somerset county council’s head of highways and passenger transport Ioan Rees21 estimated that all but 15–20 of the county’s 250 bus routes were subsidised in some form. Somerset have decided to cut more than 50% of bus funding and this is expected to result in a 50% reduction in council supported bus services.

Other Examples Include: — Cambridgeshire has decided to phase out 100% of council-funded bus routes, and Northamptonshire and Hartlepool have made similar proposals. — Areas including North Yorkshire and Buckinghamshire are looking to cut all council-funded evening and Sunday buses, and West Sussex has already decided to cut supported Sunday buses. — Suffolk and The New Forest are among the councils proposing to axe their concessionary fare schemes for young people, and other authorities such as Somerset and Greater Manchester are also looking to cut back provision in this area.

Research Demonstrates the Value of Buses We have prepared two reports that examine the value of buses. Firstly our report Transport, Social Equality and Welfare to Work22 was produced in conjunction with Citizens Advice and uses case studies from their bureaux. The report shows that poor bus provision aggravates the problem of unemployment, and as a consequence puts greater pressure on the welfare budget. Secondly our report Buses Matter23 looks more broadly at the combined social, economic and environmental value of buses, pulling together current data and research on the issue. These reports are included with this submission for your convenience. February 2011

19 http://cfit.independent.gov.uk/pubs/2008/rpt/index.htm 20 Campaign For Better Transport bus cuts map http://www.bettertransport.org.uk/campaigns/save-our-buses/map and full list of local authorities with available data http://www.bettertransport.org.uk/campaigns/save-our-buses/list 21 Transport Extra, Somerset councillors approve swingeing cuts to transport spend, 26 November 2010 http://www.transportxtra.com/magazines/local_transport_today/news/?ID=24879 22 Campaign for Better Transport and Citizens Advice, Transport, Social Equality and Welfare to Work, October 2011, http://www.bettertransport.org.uk/system/files/Citizens+advice+CBT+report.pdf 23 Campaign for Better Transport, Buses Matter, January 2011, http://www.bettertransport.org.uk/system/files/Buses+Matter.pdf cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Written evidence from Compass Travel (Sussex) Limited (BUS 27)

(1) This submission is on behalf of a medium sized Operator running substantially contracted rural bus routes throughout West Sussex, and consequently signiﬁcantly vulnerable to budgetary cuts. We have a good working relationship with West Sussex County Council with whom we are exploring the impact of the current changes.

(2) Whilst the reduction in BSOG is unwelcome it has, at least, been announced formally and reasonable notice given. This note focuses on the changes to Concessionary Reimbursement for which the announcement “So while we have identified substantial efficiency savings in this area, they are focussed on the way the scheme is administered, rather than on the benefits received.”* is misleading. The introduction of the third basis of calculation, (following RAT1 and RAT2), may, depending on negotiated outcomes, significantly reduce reimbursement.

(3) Of paramount importance is our need to have available clear and decisive guidance as to the reimbursement offered which we were entitled to have on 1 December. (See below** for quote from DfT Bulletin 26 November 2010). The Calculator issued at consultation was subject to last minute revision after welcome Ministerial intervention, and the ﬁnal version is only now available. The TCA is uncertain how the numbers play out, so it is clear that this requirement is not being adhered to.

(4) An Appraisal conducted by CPT has highlighted many deﬁciencies in the methods used and assumptions drawn within the DfT guidance eg the adoption of averages based on small samples inapplicable to the demographic here on the South Coast.

(5) An important element of the newly revised calculation is fares growth % since 2005–2006 compared to 2011–2012. This requires a number of factors that will prove difﬁcult to determine and will consequently give rise to dispute given that this % has signiﬁcant impact in the calculation.

(6) There is a potential for service withdrawal due to insufﬁciency in funding, both from Concessionary Reimbursement and County contract payments. Withdrawal from County Contracts requires three month’s notice. We should therefore advise on 1 January 2010 for any services that will not continue after 31 March 2010, but have insufﬁcient information on which to make a judgement. There is the potential that we will therefore be forced into a situation where we will have no alternative but to run loss making services for a period of time.…This, arguably, in the most obvious violation of the No Better, No Worse principle, and, I suspect, may be illegal. (The three month notice arrangement is a West Sussex contract term—we are not aware to what extent this may impact other TCAs).

(7) The calculator offers alternative Discount Fare or Basket of Fares calculation methods and presented as non mandatory guidance. We will be recommending adoption of the latter but are unaware to what degree our TCA will be restricted by funding cuts and consequently may be unable to pay although legally bound under No Better No Worse.

(8) Whilst DfT claim simpliﬁcation of the system, Additional Capacity Claims will be very cumbersome to manage and timing considerations suggest that long delays may occur. It is unclear where the point of responsibility lies for these submissions under contracted services.

(9) The debate tends to lose focus on the fact that this is not a subsidy—it is a reimbursement for costs incurred in supporting a Government initiative and it is unjust for this to be at the expense of the Operator.

(10) The over complex process is focussed on Income whereas the essence from an Operator viewpoint is the recovery of costs incurred with an overlay of legitimate proﬁt.

(11) There is a heavy and costly administrative burden placed upon a company such as ours with limited resources, in coming to terms with the demands and implications of these further changes to the scheme, necessitating the engagement of specialist agencies.

(12) West Sussex support a student concession scheme the reimbursement rates for which may well be reduced on an argument of compatibility with the adult scheme.

(13) This initiative penalises SME’s in this sector and runs contrary to other Government initiatives to enhance employment opportunities and “do everything we can to help and promote smaller businesses.” (David Cameron 2 November)

(14) Given all of the above, there is a powerful argument for the continuation of the existing scheme for a further three month’s whilst all the issues are resolved and allowing time for properly considered decisions to be made.

(15) Funding must not be withheld whilst core issues, or additional problems associated with Additional Capacity Claims, are addressed. We have cash ﬂow to manage, and we cannot rely upon Bank support in the present climate. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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References *DfT Press Notice 20 October 2010 ** Para 4. “...... and need not specify amounts due. The objective should be to make it possible for Operators to form a clear idea of the payments they can expect to receive” (How are these consecutive sentences consistent?) January 2011

Written evidence from the Community Transport Association UK (BUS 28) 1.1 The Community Transport Association (CTA) is a UK-wide charity giving voice and providing leadership, learning and enterprise support to over 1,500 member organisations in civil society which deliver innovative and ﬂexible transport solutions to achieve social change in their communities. The CTA promotes excellence by providing training, e-based resources, publications, advice, consultancy, events and project support on voluntary, accessible and community transport. 1.2 Community transport is safe, accessible, cost-effective, ﬂexible transport run by the community for the community. Community transport shows what can be done when people take responsibility for solving their own problems. It mobilises and engages local communities, as it is provided by charities and voluntary organisations (which are often very small and local), and harnesses the experience and energy of volunteers who give freely of their time to help others. 1.3 Community transport is about freedom and fairness of opportunity. It provides an essential, responsive service for a wide range of people—often the most vulnerable in society. These are people who cannot use or do not have access to cars, taxis or buses and who depend on community transport to get to the services and the social activities they require. 1.4 Community transport is a lifeline in both rural and urban areas. It takes disabled people to work, children to school, sick people to healthcare and older people to the shops. It runs local bus routes and provides transport for a wide range of clubs, voluntary bodies and care homes. People shape the services they want and community transport makes it happen.

2. Summary 2.1 We believe that there will be an unfair and disproportionate effect following cuts in BSOG payments to the community transport sector. We would urge the Transport Committee to conclude that the payments of BSOG to community transport organisations are a unique and special case. This should be dealt with separately in any future discussions on payment level or administrative arrangements. These future discussions should be aimed at retaining, in full, the existing level of BSOG paid to community transport operators and separating the administration and auditing of this subsidy for community transport organisations from those that apply to mainstream systems. We suggest that the CTA should be asked to compile detailed proposals for outsourcing from the Department of Transport the auditing and payment of future bus subsidies to not-for-proﬁt operators using Section 19 and Section 22 permits. The possibility of changing the calculation method to include some elements of “per-passenger” payment should be also considered. 2.2 We believe that reductions in local authority funding are likely to have a signiﬁcant impact on the mainstream transport provision for those individuals and communities in society who are most vulnerable. However, we strongly feel that with expert advice and guidance local authorities can utilise community transport organisations as part of a solution to this problem. 2.3 We continue to believe that the off peak free concessionary fare arrangement is discriminatory because passengers who cannot use mainstream buses are, in many cases, asked to pay a fare for their journey that would have been free had they not been elderly or had a disability. 2.4 With regard to the involvement of passengers in designing and specifying transport services, we believe that community transport has an excellent record in achieving exactly this outcome.

3. Reduction in Bus Service Operators’ Grant 3.1 We believe that there will be an unfair and disproportionate effect of the cuts in BSOG payments when these are applied to the community transport sector. 3.2 To support this contention we would first like to draw the Transport Committee’s attention to the range of ameliorations that are open to commercial bus operators to deal with this reduction. Commercial operators have several options, they can: 3.2.1 Raise fares—obviously constrained by competitive situations but the Office of Fair Trading (OFT1112con dated August 2009) states “in many local areas, current competitive pressures may be insufficient to achieve best value outcomes for both bus users and tax payers” cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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3.2.2 Reduce service levels—tactical reductions in service frequency or operating hours or days can create savings for operators. Simply changing the area of operation is also a service level reduction for those affected by withdrawal of services. 3.2.3 Use profit margins as a “cushion”—decisions to raise fares or reduce services levels tend to be taken opportunistically, in the meantime profit margins can be squeezed to wait for these opportunities. 3.3 We detail the above comments to illustrate that none of these ameliorations are likely to be available or be used by community transport organisations. The circumstances are: 3.3.1 Raising fares is not an option for many community transport operators because the fares are specified by the local authority funding the route or, in the case where local authority discretionary powers have been used to extend concessionary fares, the passenger does not actually pay. 3.3.2 As community transport operators do not make a profit there is no particular advantage gained by reducing service levels because any remaining service still needs to be economically viable. In the case of services operated at the behest of the local authority, reducing service levels are only possible with their agreement. 3.4 Based on the above, we believe that any reduction in BSOG payment to community transport operators will cause either operators to withdraw from contractual arrangement to provide services (an outcome we would expect where the operator is using accurate management accounting and is closely monitoring costs). Alternatively, we suggest that some community transport operators may become insolvent and, therefore, close. This is a more likely outcome for smaller organisations that are without the staff to analyse costs accurately or in cases where operators are unable to withdraw from local authority contracts because of severe penalties that are common in, for example, home-to-school local authority contracts.

3.5 We would urge the Transport Committee to conclude that the payments of BSOG to community transport organisations are a unique and special case that should be dealt with separately in any future discussions on payment level. These future discussions should be aimed at retaining in full the existing level of BSOG paid to community transport operators.

3.6 The administration of BSOG for Transport Act 1985 Section 19 permit vehicles is different from mainstream public transport operators. BSOG is only paid for a journey which is wholly or mainly used by speciﬁed classes of passenger.

3.7 We are aware that the Department for Transport has introduced measures to encourage smart ticketing and has a longer term ambition that any bus subsidy should be paid on a “per-passenger” basis. We believe these two issues ﬁt together and when all buses are ﬁtted with smartcard readers, this will provide the auditing system to changeover to the different payment calculation.

3.8 We believe that the Transport Committee should be aware of the relatively high cost of these card readers and the associated back-ofﬁce equipment and should conclude that such readers would be a waste of money for community transport vehicles.

3.9 We would also urge the Transport Committee to conclude that because BSOG payments to community transport are a unique and special case that the administrative arrangements should be considered separately from mainstream bus operator arrangements. Future discussions should be aimed at separating the administration and auditing of this subsidy from mainstream systems. We speciﬁcally suggest that the CTA should be asked to compile detailed proposals for outsourcing from the Department for Transport the auditing and payment of future bus subsidies to not-for-proﬁt operators using Section 19 and Section 22 permits. The possibility of changing the calculation method to include some elements of “per-passenger” payment should be also considered.

4. Reduction of Funding to Local Authorities 4.1 We believe that reductions in local authority funding are likely to have a signiﬁcant impact on the mainstream transport provision for those individuals and communities in society who are most vulnerable. By the very nature of local decision making it will be biased towards the greater quantity of people needing a service rather than the depth of the needs of a minority. We can only imagine that low utilisation bus services will be cut and the number of subsidised routes reduced. Typically this will mean: 4.1.1 Evening and weekend/Sunday services will disappear, leaving people who do not have access to a car, living in isolated communities and suburban housing estates, without the transport to continue their employment or carry on an active social life. 4.1.2 Bus routes to remote areas will be cut having similar effects on employment, social infrastructure and on longer term health and wellbeing.

4.2 However, we would seek to persuade the Transport Committee of our strongly held view that local authorities can engage with community transport organisations as part of a solution to these issues. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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4.3 Several local authorities are already doing so and we would highly commend several actions we feel make a positive contribution to this engagement: 4.3.1 We are aware that an PTE has funded additional training for local community transport operators to allow members of their staff to obtain qualifications and other experiential learning aimed at creating viable organisations to bid for local service delivery. 4.3.2 We are aware that a local authority has supported a community transport organisation to apply for grants and loan funding to set up networks of other operators delivering services across an extensive area of a county. 4.4 We do, however, feel that additional help, expert advice and guidance is usually necessary for both local authorities and community transport operators to make this opportunity a reality. 4.5 Of particular note in any proposal to make community transport part of a solution are the changes introduced in the Local Transport Act 2008, which allows not-for-profit operators to more easily run scheduled and demand responsive local public transport services under a Community Bus Permit (Transport Act 1985— Section 22). The latest report from the Traffic Commissioners shows that the annual number of applications for these permits has risen.

5. Concessionary Fares 5.1 The Community Transport Association has long held the view that fairness and equity would be demonstrated if the elderly person’s free off-peak concessionary fare arrangements were formally extended to include dial-a-ride and similar services. Passengers use these services simply because they cannot walk to the bus stop or cannot board a mainstream vehicle. We continue to believe that current situation is discriminatory because only passengers who cannot use mainstream buses are asked to pay a fare for their journey that would have been free had they not been elderly or had a disability

6. Passenger Involvement in Bus Service Planning 6.1 With regard to the involvement of passengers in designing and specifying transport services, we believe that community transport organisations have an excellent record in achieving exactly this outcome. Most community transport organisations are governed by trustees drawn from the community they exist to serve and it is not uncommon for organisations to undertake extensive surveys to establish transport needs. January 2011

Further written evidence from the Community Transport Association UK (BUS 28a) HOW TO INCREASE THE ROLE OF COMMUNITY TRANSPORT IN LOCAL TRANSPORT PROVISION The CTA wishes to submit the following additional evidence to the Transport Committee. The CTA believes that if Government and local authorities want community transport organisations (CTOs) to play an increased role in local transport provision, then we believe the following interventions will help to achieve this aim: 1. The development of community operated bus (Section 22) services: this is where there is greatest potential—a really significant opportunity—for local authorities (LAs) to work with community transport organisations (CTOs) to introduce new Section 22 bus services making full use of the provisions contained in the Local Transport Act. These services could be either self-contained or offer flexible provision feeding in to commercially run routes (which would help ensure their viability). While the potential is huge, particularly in rural areas, increasing provision is dependent on two actions: firstly, building awareness so that LAs, CTOs and local communities seriously consider this form of community transport provision (see above); and secondly, the need to capacity build so that CTOs can provide what will, in most cases, be a very different type of operation. The latter will require specific support to CTOs. Through capacity building there is then the opportunity to shape the market provision. 2. Securing the future of community car schemes: with consistently increasing fuel costs volunteers and volunteer organisations are now saying even more strongly that the HMRC AMAP of 40p per mile is a real barrier to volunteering. There are thousands of volunteer run community car schemes across England. If these are to be sustained, let alone further developed, then extending to volunteer drivers the 5p per passenger additional allowance that is available to all business users would demonstrate the Government’s commitment to volunteering and ensure that the contribution made to public services by volunteer drivers continues. The change would have a very tangible impact on volunteer drivers without any significant impact on Government expenditure or revenue. 3. Extending the concessionary travel concession to community transport: At present concessionary fares for pensioners and others are automatically available on public transport but not on community transport. So a pensioner who is fit to walk to the bus stop can travel free but one who is infirm or cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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disabled may have to pay. Local authorities have the discretionary power to provide free fares on community transport, but most do not do so and in the current climate it is even less likely that they will. Extending concessionary fares to community transport users as of right would help the most vulnerable, create a more level playing ﬁeld, and ensure that more community transport organisations can survive. There would be a relatively small funding cost for those local authorities which had previously not extended concessionary fares in this way, so the initial step would need to be to assess the ﬁnancial implications and to reach a view on whether this could be funded, eg from a future restructure of BSOG, or as a small offset to the savings in concessionary fares which will be achieved due to reductions in mainstream bus services or through the rise in pension age. The CTA would be pleased to give oral evidence to the Transport Committee in support of this additional written evidence. February 2011

Written evidence from the Chartered Institute of Logistics and Transport in the UK (BUS 30) Introduction 1. The Chartered Institute of Logistics and Transport in the UK (“the Institute”) is a professional institution embracing all transport modes whose members are engaged in the provision of transport services for both passengers and freight, the management of logistics and the supply chain, transport planning, government and administration. We have no political affiliations and do not support any particular vested interests. Our principal concerns are that transport policies and procedures should be effective and efficient and based, as far as possible, on objective analysis of the issues and practical experience and that good practice should be widely disseminated and adopted. 2. The Institute has a specialist Bus and Coach Forum, a nationwide structure of locally based groups and a Public Policies Committee which considers the broad canvass of transport policy. This submission draws on contributions from all these sources. 3. Before considering each of the four issues on which the Committee is focussing its inquiry it is appropriate to make a number of observations on the current status and performance of buses in the UK transport system: (a) Although buses are the most available and most used mode of public passenger transport, central and local government policy and public opinion all tend to neglect their contribution until, as at present, dramatic change is necessary. Rather than the steady evolution of services found in many other post- industrial economies there has been a tendency in the UK to drift (generally accompanied by slow decline in passenger numbers) punctuated only by the significant changes necessary to meet regulatory reform or budgetary restrictions. For too many people, bus travel has been allowed to become a distress purchase rather than an informed transport choice. (b) Particularly in urban areas, the role of buses is crucial in managing the twin threats of congestion and environmental pollution. Buses offer significant and flexible capacity which if properly utilised through effective traffic management, marketing and public awareness can significantly reduce congestion delays and atmospheric pollution. Conversely without effective traffic management, public awareness and marketing buses may contribute more to these problems than to the solutions. (c) Similarly in rural and inter-urban contexts bus and coach services can and do play significant roles, as lifeline services for those without access to private cars, in providing alternatives to the long car commutes that are straws breaking the congestion camel’s back in urban centres and in providing longer distance travel in parts where the rail network does not reach (and often never did!). (d) Whether in the urban or the rural context, the social and environmental contributions of buses are often as important, possibly more so, than their economic role. However, “bus” perhaps needs to be re-interpreted, not only to encompass coaches but also the demand responsive (DRT) and community transport services likely to be widely canvassed as possible solutions as the measures in the spending review take effect. (e) The Institute and its predecessors have consistently argued in front of your Committee and its predecessors that buses compete in a travel market in which private cars currently take poll position. In both national and local policy achieving a socially and environmentally sustainable passenger transport system is as important as maximising the economic efficiency of the deregulated sub-market for local bus services and it is a matter of regret that the current and previous investigations into the Local Bus Market by the Competition Authorities have steadfastly refused to recognise this. (f) As the points above suggest, bus services are not, and should not be, a matter for the commercial operators alone. They depend on effective partnership between those operators (including community transport) and local councils in their roles both as highway authorities and as guardians of the public interest able to issue contracts to secure additional “socially necessary” services (insofar as they can afford to do so!). In fact most councils go further and as well as using their highways powers to provide bus lanes and traffic signal phasing to assist bus services will also take account of bus services in their parking provision and pricing policies and play a part (sometimes the leading role) in providing cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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bus service information and marketing. Many councils also provide and manage bus stations, bus stops and shelters. (g) One of the Institute’s predecessors published the report “Bus Routes to Success” which brought the term “Quality Partnership” (QP) to prominence followed by adoption both by the last Government and its predecessor. This is not the place to debate the merits of the several statutory variants of QPs now available nor the case for Quality Contracts based on London-style franchising advocated by some. However, in order to better manage the impact of the Spending Review cuts on bus users it is essential that there is effective partnership between local authorities and their bus and community transport operators in order to make best use of the diminished level of resource available. (h) It will be clear that the Institute advocates a consistent approach to all branches of transport policy. After all, all modes including rail, air and sea necessarily interact. In the case of cars, buses and road goods transport the infrastructure they use is largely common. We are concerned that recent “tweaks” introduced by the Coalition Government, ostensibly to reduce regulatory burdens, such as reducing constraints on parking provision in the planning process and limiting the scope for public authorities to discourage commuter parking by pricing, will weaken the links between different modal policies. Insofar as encouraging greater use of buses and coaches is concerned, the consequences of the Spending Review are likely to lead to loss of service, thereby further weakening vital policy linkages. (i) As a final point in this overview we observe that at deregulation of bus services outside London in 1986, public support (including concessionary travel) was of the order of 30%, comparable with the most admired European and North American systems of the day. A quarter of a century later it has risen to more than 40%, some of this resulting from the generosity of the English National Concessionary Travel Scheme. Within these broad generalisations there are (and were) many local instances of better performance based on partnership, sound management reflecting local needs and a willingness to innovate. (j) A “one size fits all” national approach that does not cater for regional variations and traditions is unlikely to be successful and the Institute hopes that the current Government’s “Big Society” approach will provide the freedom for local stakeholders to become involved in developing local bus networks that take full account not only of economic but social and environmental needs whilst making best use of both the public and private sector resources available. 4. Observations on the four issues on which the Committee has called for evidence follow. The Institute anticipates that other evidence will provide detailed statistical projections and has concentrated on qualitative interpretation of the impacts of the changes. The Institute will be pleased to expand on this submission orally if the Committee so wishes.

Issue 1: the impact of the reduction in Bus Service Operators’ Grant, including on community transport 1.1 Bus Service Operators’ Grant (BSOG) is a continuation of the Fuel Duty Rebate (FDR) introduced in 1965. Up to 1998 FDR was paid at the rate of 100% of the benchmark cost of fuel for all eligible services, in essence those now classified as Local Bus Services in accordance with the Transport Act 1985. In 2002 eligibility was extended to community transport services providing services for a number of groups including elderly and disabled people, unemployed people and those suffering social exclusion. 1.2 BSOG is still based on rebates of fuel duty but has been varied several times to promote the adoption of cleaner (lower carbon impact) fuels, fuel efficiency and, most recently the adoption of smart technology for ticketing, vehicle location (and, hence, real time passenger information). Base rates are now 75.6% for diesel fuel and 77.3% for “road fuel gas other than natural gas” where the buses can claim no technology or efficiency enhancements, and 100% for non-enhanced buses using Biodiesel, Bioethanol (not necessarily a lower carbon impact fuel depending on the method of production) or Natural Gas. Enhancements of 2% for Automatic Vehicle Location, 3% for a 6% improvement in fuel efficiency and 8% for ITSO compliant smartcard ticketing capability are payable. A further enhancement of 6 pence per kilometre is payable for low carbon buses that achieve 30% improvement over buses equipped with engines to Euro 3 standard. 1.3 Although viewed by some as a crude instrument, FDR, as first introduced, had the advantages of ease of administration (operators have to submit verified claims for payment) and equality of impact for all bus users. As amended as BSOG both advantages have been eroded, small bus companies and community transport operators in particular losing out as they tend to have older less efficient vehicles and are not able to afford investment in smart technology (such improvements where they exist typically being funded by public sector grant). 1.4 Changes that have already happened have thus harmed the fragile economic base of small bus operators, many of them based in rural areas and some offering effective competition to the local monopolistic tendencies of the major bus operating groups. 1.5 Whilst the opportunity to use FDR as an instrument of transport or environmental policy remains (for example reverting to 100% to encourage greater use of buses) the Coalition has announced its intention to make cuts of 20% between 2012 and 2014. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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1.6 The impact of the changes may appear to be small—estimated at 2% of industry turnover. Fuel costs are believed typically to amount to 20–25% of current bus operating costs so there are bigger threats from anticipated increases in fuel prices. Again, the major transport groups are at an advantage, gaining benefits from long term bulk purchase contracts and price hedging whereas smaller operators pay at or near retail pump prices. 1.7 At the margins of both commercial and subsidised service operation there is the danger that the cut in BSOG will be a final contributory factor in decisions either by an operator to cease commercial operation or by a council to discontinue support for contracted services. Unfortunately rural services are rather more vulnerable than urban because of their generally higher cost base. 1.8 It is anticipated that most of the financial impacts of the BSOG changes will be containable both through improving operational efficiency and generating additional revenue through more effective marketing (particularly taking advantage of the higher proportional impacts of fuel duty increases for private car users). However the marginal losses of service will bear most heavily on people in more remote areas or dependent on infrequent services penetrating housing areas. These are most likely to include a high proportion of socially disadvantaged bus users. 1.9 The Institute approves of the Coalition Government’s decision to streamline the labyrinthine structure of transport support grants (which are in practice administered not only by the Department for Transport (DfT) but also by the Department of Communities and Local Government (DCLG) in respect of revenue support grants for local councils). In previous debates on governance and regulation of the bus industry we have argued that there is a strong case for consolidating BSOG, Concessionary Travel support payments and subsidised service payments into a single locally administered “pot”, but with a stakeholder conference establishing the network eligible for support payments. There is still merit in this argument and the case for devolving BSOG payments may well be pursued in other submissions to you.

Issue 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 2.1 The reductions in local authority support for subsidised bus and community transport services and the recent round of changes to reimbursement through local councils for concessionary bus travel will collectively have the most significant impact on bus service availability and are not wholly independent of each other. 2.2 Many subsidised services are vital for those seeking employment, for socially necessary activities such as visiting health clinics and hospitals, for further education and generally for maintaining basic levels of access and mobility. Bus services therefore can assist the economic recovery, support wider reform of the welfare system and help maintain reasonable quality of life for those most susceptible to social exclusion. 2.3 A number of recent studies applying cost benefit techniques to bus service subsidies have shown benefits significantly exceeding costs and in many cases substantially better than many transport infrastructure projects. Where the availability of services helps people to obtain and retain jobs, the Department of Work and Pensions suggests that savings to the community are in the range £7,000–£14,000 per annum. 2.4 It is therefore disappointing that some councils have adopted “knee jerk” reactions to finding the effective 28% cut in funding for local transport accumulating as a result of the combined effect of DfT and DCLG cuts through the Transport Block grants. These have impacted both on subsidised services—for example where councils have resolved to withdraw all support for evening and weekend services—and capital funding for small schemes (such as bus priorities, bus passenger facilities and passenger information) which often represent better value for money in terms of evaluation criteria than more substantial schemes retained both locally and nationally. 2.5 Cutting subsidised services also has an adverse impact on both commercial and often on other supported services in the area. This is because many return journeys are made in one direction in the daytime when services may be commercial or a council provides support on the basis that daytime services tend to be busier and therefore of greater “value” than evening or weekend services. If the evening or weekend service is no longer available both legs of the return journey are lost. In consequence users suffer, in many cases accentuating social exclusion for low income families, bus operators suffer additional loss of income on their remaining commercial or supported services and, if sufficient trips transfer to car, there are potential adverse consequences for the environment and energy conservation. 2.6 The current arrangements for revenue support to the bus industry are complicated and will remain so regardless of the simplifications introduced by DfT and DCLG. The industry receives on average 40% or more of its turnover through public sector support payments including concessionary travel reimbursement and it must be recognised that local authorities and other stakeholders have a legitimate role in determining the network of services to be operated.. 2.7 There is scope to consider alternative funding routes—for example those councils that have taken responsibility for enforcement of decriminalised parking and moving traffic offences have found that this has been cost effective. Revenue from fines exceeds costs and surpluses contribute a worthwhile fund for further traffic management or public transport improvements. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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2.8 The Institute is aware that a number of councils have established Integrated Transport Units bringing together the requirements of internal clients such as social services and special educational establishments together with management of the councils’ own vehicle fleets and procurement of contracted services including subsidised bus services, community transport, taxis and social car schemes. Some significant reductions in costs and improvements in quality of service have been reported, for example by the North West Centre of Excellence in Local Government which led work on this topic. 2.9 More ambitiously, other stakeholders such as local employers, town and shopping centre managers, health service organisations and community groups might be involved both in specifying and funding services. A case in point is the successful Dales and Bowland Community Interest Company which has delivered network expansion, significant patronage growth and substantial reductions in costs per passenger journey for initially leisure and recreational Sunday and Bank Holiday services in the Yorkshire Dales. The Institute believes that the Company will submit its own evidence to the Committee. 2.10 As noted in paragraph 1.9, the Institute believes that there is a case for further review, hopefully leading to devolution and consolidation of funding streams for application at an appropriate local level. This requires consideration of governance, network specification and alternative funding arrangements and is beyond the scope of this submission.

Issue 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 3.1 Free off-peak travel for elderly people is substantially responsible for much of the increases in bus patronage that have occurred in most areas of England since 2007. The concession is much appreciated by recipients and there is some evidence that it is also responsible for increasing travel by family groups for leisure, recreational and shopping trips. Disabled people are also appreciative of the greater freedom to travel although many of them suffer an unintended consequence in that buses are often full, particularly immediately after 09:30 when there is an artificially induced peak in many areas. Seats and spaces in which priority is intended for disabled people are frequently taken up by elderly travellers or the buggies of family groups. 3.2 Some councils have mitigated the effects of the artificial peak by using their discretion to fund concessions that start before 09:30, typically at 09:00, 08:30 or occasionally earlier. This is of great value to elderly and disabled people attending hospital or clinic appointments and does not appear to have resulted in overcrowding because elderly and disabled passengers are travelling at the same time as office and shop workers. The question arises as to whether there needs to be a restriction on start time for the free concession as in most areas outside London the main peaks for bus operators are around school starting and finishing times. 3.3 Several Councils (for instance Cornwall County Council) have already announced their intention to remove the discretionary extensions to time periods in their areas in order to make savings in their budgets. In geographically large counties this may severely constrain opportunities to use the concession as distances to large towns and key facilities are long and services infrequent. We are aware that some other councils may be examining whether their interpretation of the regulations covering classes of disabled people and their companions entitled to concessions can be tightened to make further savings although except in the largest authorities these would be very small. In either case the changes will have the greatest impact on low income groups. 3.4 There is effectively a 28% cut in funds from the Department of Communities and Local Government to councils in the Block Grant to fund the national concessionary “free” travel scheme. This money is paid into councils’ general treasury coffers so we might expect further squeezes from financial officers trying to fund other council services as the grant is not ring-fenced. The position is further complicated as responsibility for payment of concessionary travel reimbursement will transfer from lower tier to upper tier authorities in English counties where there are two tiers of local government so that the changes in intended funding levels are far from transparent. 3.5 The unrelated change to the reimbursement rules for this scheme promulgated by the DfT also has an impact. Effectively DCLG appeared already to have taken into account the savings predicted by the research undertaken for the DfT prior to consultation on the new rules. Unfortunately, despite sophisticated analysis, the researchers appeared to have used a limited data sample collected principally in urban areas in affluent parts of England. Unfortunately, most commentators believe this data not to represent adequately the generality of bus services, particularly in rural areas and less affluent urban areas, particularly in Northern England. The new rules as first published favoured frequent urban services leaving operators out of pocket for the sort of occasional, longer distance services prevalent in most rural and inter urban operations and in many parts of England outside the South East. The fudges now introduced to overcome these limitations have the potential to complicate rather than simplify the situation. 3.6 Unfortunately, the fiction of the “no better, no worse off” principle introduced in the regulations for concessionary travel following the defeat of the then Government’s original proposals for limited concessionary travel in the Transport Bill 1985 has led to considerable expense and use of scarce management resources for both operators and local authorities. Less complex systems for determining funding and reimbursement for concessionary fares are obviously desirable to simplify administration and reduce the potential for dispute. However, a simpler system promulgated nationally will inevitably create more winners and losers within a cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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capped level of Government funding (in itself incompatible with “no better, no worse”!). In other words greater simplicity can result in outcomes which represent poorer value for money for the taxpayer and could also have impacts on other budgets for transport authorities. 3.7 Prior to the changes in 2007 (subsequent to which the then Government published a national reimbursement calculator in response to the spate of appeals to the Secretary of State for Transport) several authorities, principally PTEs but also some unitary and county councils, effectively declared their concessionary travel budget for the coming financial year and then negotiated collectively with the operators in their areas a set of reimbursement rules consistent with that budget. Such an approach is both consistent with a commercial bus operating industry and delivering clarity for all concerned. 3.8 In paragraph 2.1 we noted the inter-relationship between local authority payments for subsidised services and concessionary travel. This is because for many supported services the majority of passengers are elderly or disabled so that withdrawing the service will leave the concessionary travellers with no public transport alternative. Some (the affluent retirees) will be able to travel by car, many will not. A high proportion of the remaining passengers may be from other disadvantaged groups so that the consequences of these reductions are both socially and environmentally damaging. 3.9 As noted in paragraphs 1.9 and 2.10, the Institute believes that there is a case for further review, hopefully leading to devolution and consolidation of funding streams for application at an appropriate local level. This requires consideration of governance, network specification and alternative funding arrangements and is beyond the scope of this submission.

Issue 4: how passengers’ views are taken into account in planning bus services, and the role of Passenger Focus in this area 4.1 For many years the generally more afﬂuent and eloquent market segment of rail passengers had statutory representation on a wide range of issues, but the far larger, but generally less vociferous, group of bus passengers had only a voluntary mechanism, the Bus Appeals Body established after the 1985 Transport Act deregulated bus services outside London. This situation was rectiﬁed when Passenger Focus took on additional responsibilities for bus services in 2008. 4.2 With the relatively small resources available to Passenger Focus it is likely that its interest in bus matters will be mainly directed to general monitoring and suggestions for improvement on an industry wide basis. It is gratifying that they have already recognised that the bus industry needs the active involvement of local highway and transport authorities and are taking a close interest in the way in which decisions are taken to allocate contracts for supported services. 4.3 Many transport authorities have consultative committees that consider public transport requirements and performance. Their effectiveness varies from information exchange and endorsement of decisions already taken to genuine innovative input into the service planning process. The major bus operating groups all use market research in various forms and with differing levels of public consultation. 4.4 The Dales & Bowland Community Interest Company has proposed a model (referred to at paragraph 2.9) in which a wide group of stakeholders are involved in specifying a rural network and is now working with bus and community transport operators and North Yorkshire County Council on a potential application for Sustainable Local Transport Fund grant that will allow the principles of a “Big Society” approach to local transport to be tested in the Yorkshire Dales. 4.5 As already noted in paragraphs 1.9, 2.10 and 3.9, the Institute believes that there is a case for further review, hopefully leading to devolution and consolidation of funding streams for application at an appropriate local level. Involving all appropriate stakeholders in service planning as proposed in the Yorkshire Dales will be an interesting trial of the principles. Application at national level requires evaluation of pilots such as this together with consideration of governance and alternative funding arrangements and is beyond the scope of this submission.

Summary 5. A recent letter in the “Yorkshire Post” provoked by the insensitive blanket cut of all evening and Sunday subsidised services by North Yorkshire County Council summarised the situation facing bus services after the spending review as a “quintuple whammy” as follows: “First, there is the cut in contract revenue as councils and integrated transport authorities make cuts of 20% or more in their transport budgets. Second, there is an inevitable consequent loss of income on other ‘commercial’ services as many of the trips on the subsidised services to be cut are balanced by a return trip earlier or later in the day. If there is no return bus available, the likelihood is that both outward and return journeys will either be made by car or not at all. Third, there is the 20% or more cut in funds from the Department of Communities and Local Government to councils to fund the national concessionary ‘free’ travel scheme. This money is also swallowed up into cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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councils’ general treasury coffers so we can expect further squeezes from financial officers trying to fund other council services. Fourth, there is the unrelated change to the reimbursement rules for this scheme promulgated by the Department for Transport which has yet to be finalised but which provoked protest from many bus operators and councils when it was realised the new rules appeared to favour frequent urban services leaving operators out of pocket for the sort of occasional, longer distance services prevalent in most of North Yorkshire. Fifth, there is a 20% cut to the bus service operators grant paid as a rebate of fuel duty. The Department for Transport has also revised the rules for this grant to favour operators who invest in greener buses and smart technology.” January 2011

Supplementary written evidence from the Chartered Institute of Logistics and Transport in the UK (BUS 30a) Introduction 1. The Chartered Institute of Logistics and Transport in the UK (“the Institute”) is a professional institution embracing all transport modes whose members are engaged in the provision of transport services for both passengers and freight, the management of logistics and the supply chain, transport planning, government and administration. We have no political affiliations and do not support any particular vested interests. Our principal concerns are that transport policies and procedures should be effective and efficient and based, as far as possible, on objective analysis of the issues and practical experience and that good practice should be widely disseminated and adopted. 2. The Institute has previously made a detailed submission in response to the first call for evidence of the Committee. This supplementary evidence sets out the Institute’s view on matters arising from the first round of oral evidence gathering sessions and recent policy developments.

Transport White Paper and Recent Policy Announcements 3. The recently published transport white-paper sets out carbon reduction and economic growth as the priorities for local transport policy. CILT considers that these priorities need also to encompass the role that the bus places in society beyond its positive environmental credentials and the access it gives the labour market to employment opportunities. The CILT considers that how that wider value to society is measured and delivered in the context of severely limited funding is key to unlocking the full potential of the bus. 4. The longer term commitments in the white paper regarding smart ticketing and the green bus fund are seen as positive commitments. 5. The review of BSOG brings uncertainty to passengers, the industry and local transport authorities whilst the mismanaged approach and subsequent ad hoc allocation of resources to the funding of community transport as a substitute for the bus in some situations is seen as a retrograde step. It will encourage the blanket withdrawal of subsidy for socially (but also economically in terms particularly of low paid workers travel) necessary bus services in favour of community transport solutions, including in areas where this solution is not the most appropriate. 6. The concept of “community transport” has become a misnomer for a more flexible approach to service provision which encompasses a range of delivery models. Genuine support for community transport is to be welcomed but simply expanding the community transport sector to have the capacity and capability to replace “main stream” bus provision by a less costly vehicle underestimates the complexity of the community transport sector’s objectives and its ability to deliver change on the scale envisaged. There is also a perception that smaller vehicles can be operated “cheaply” whereas the main benefits are derived from flexibility of operation rather than operational cost savings. In fact in terms of human resources the direct costs of community buses may be higher as they require an administrative centre to be staffed to undertake scheduling and control functions. 7. A missed opportunity is the link to Local Economic Partnerships (LEPs) that is made by the white-paper in terms of road congestion relief at key road locations. Improved use of bus services would avoid the need for this capital investment or if the investment were to be linked to bus services (and possibly logistics activity) serving LEP priority industries and locations then a more targeted outcome would result.

Funding and Regulation of the Industry 8. The current uncertainty regarding funding of the industry is creating a vacuum that will remove the positive expectations that the industry and other interested parties have sought to develop and which is recognised in the white-paper. This vacuum undermines the efforts being made to improve the quality and coverage of services and the social, economic and environmental beneﬁts that result. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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9. The outcome of the Competition Commission review of the competitiveness of the industry will have a long term role in shaping how the industry operates and is managed going forward. Notwithstanding the Competition Commission’s conclusions, CILT consider that the unclear and divided responsibility for seeking and administering the funds arriving in the industry is not ensuring that the funds available to the industry are used to best effect.

10. As funding is linked to the regulatory framework how the industry operates within this should also be a consideration in any examination of the way funding is used.

11. The CILT believes that the funding flowing into the industry should be placed under control of a joint operator / local authority body that allocates this funding to meet both the commercial requirements of operators and the social and economic development requirements of local authorities. A single pot of funding administered at the appropriate level will allow real identification of priorities and mutually agreeable targeting of funds and setting of levels according to local circumstances. For example, rural areas may have a need for enhanced rates of BSOG or equivalent to ensure that a base network is maintained whereas in urban areas changes to the level of concessionary fare reimbursement may be appropriate in certain circumstances. CILT is of the view that a single funding pot would give the flexibility needed to ensure the maximum quantum of bus services are made available to the travelling public.

12. The development of a single funding pot for all public funds flowing into the industry could also encompass the development of the Association of Transport Co-ordinating Officers (who represent local authority passenger transport co-ordination and policy development staff) concept of the “quality network” as previously considered when the Committee examined the structure of the industry. The setting of priorities for funding of the quality network at a local level is suggested to be the lowest practical level at which the benefits of a planned and structured network of bus services can be developed by operators and local authorities working in partnership.

13. In the medium term CILT sees the potential beneﬁts of resource-led approaches to tendering for the non- commercial network of services that will continue to require direct public subsidy, however that is delivered. The current regulations relating to tendering were developed in an era which considered the purchase of “socially necessary” bus services on a route by route basis. A more ﬂexible approach based on area wide tenders and possibly encompassing the principle of de-minimis exemptions from tendering when the previously tendered quantum of service provision across an area requires amendment to react to market changes should be encouraged by the Committee. At the very least this approach will allow the formalisation of tendering for “packages of services” and the building of partnerships to deliver tendered networks. Department for Transport (DfT) guidance on good practice for securing socially necessary services would be welcome to ensure greater consistency in the criteria used and also the spread of good practice.

14. DfT guidance and good practice on the integration of “passenger-carrying services” would also be valuable to local transport authorities in the current difﬁcult ﬁnancial climate of reduced funding and uncertainty for many years to come. Provision of “passenger-carrying” services is still fragmented in the UK. As well as conventional bus services, there is Demand Responsive Transport, education transport, social services transport, non-emergency patient transport, “works buses” (employers, sometimes jointly, providing transport for employees’ commuting, often as part of a Travel Plan), and supermarket and hotel courtesy buses.

15. CILT identiﬁed in our earlier evidence that concessionary fares for older and disabled people represent the greatest uncertainty to the industry. Changing demographics and questions of long-term sustainability remain unanswered despite of the recent issue of the revised “DfT calculator” or RAT (Reimbursement Appraisal Tool). Options for the long term management of this issue could include further manipulation of the reimbursement system to contain spend. CILT sees this as having serious short term consequences for industry stability. Supply side options may include a cap on the level of use or a ﬂat fare system for all journeys by concessionary pass holders. The second of these options would appear socially divisive and places a greater and unfair burden on the poorest in society. Journey limitation could be managed through smart card technology using “capping” principles similar to those used for Oystercard (although in this case limiting free travel in a period rather than maximum spend) and, whilst retaining a high level of mobility and free travel at the point of use, address the long-term reimbursement issue.

User Representation

16. CILT understands the key reason for the additional call for evidence by the Committee was led by the view that user groups had not engaged fully in the ﬁrst call for evidence and in the subsequent evidence gathering sessions. The CILT, whilst content in principle to follow the views of others such as Passenger Focus and Bus Users UK on the role of user engagement and user groups, does encourage the Committee to consider the following points: — That the lack of user participation has resulted from the fragmented industry structure with divided responsibility for the control of operations between the public and private sectors; cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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— That operators and local authorities who have engaged most fully with the market (ie users) can be shown to demonstrate the greatest levels of passenger growth and satisfaction, examples include Trent Barton Buses market-led route branding activities and Warwickshire County Council’s “County-links” network of supported services using high quality vehicles purchased by the authority; — That in the recent round of reviews of bus service expenditure by local authorities consultation has been undertaken in order to identify the “public perception” of the changes in the tendered service networks. In many cases no attempt has been made to compensate for differing degrees of rurality and it is disturbing that one witness in an oral session stated that in considering what to cut no comparison was possible between different localities in the same county—how then are budgets set? — In some counties it appears that the only purpose of the “consultation” was to conﬁrm decisions already taken in principle and no alternatives were considered. Much of this consultation would appear to the CILT as to be a matter of identifying the relative contribution of individual services and conﬁrming preconceptions rather than seeking to assess the role the bus plays in society and its economic and social value. In some counties there has been no consultation at all with bus users and transport groups. — CILT has concerns that the spending cuts have left the organisation with a statutory duty to represent bus passengers, Passenger Focus, with limited resources to investigate the performance of the industry in respect of the perceptions of passengers and service quality. April 2011

Written evidence from Devon County Council (BUS 31) Summary of Main Points 1. Local authority (LA) local transport spending is relatively low priority compared to other local authority spending responsibilities, and will therefore inevitably take a much greater hit from CSR. 2. The relatively good transport capital CSR settlement announced by government is not reflected in local authority revenue transport budgets. It is suggested that this needs to be reconsidered by government as a matter of high priority if maximum future benefit is to be gained from capital investment. 3. The greater LA flexibility from reduced ring-fencing does not mitigate against this due to greater statutory responsibilities of other LA services spending relative to support for local bus services. 4. In rural areas the proportionate cut in bus services will be larger than the budget cut as: (i) rural commercial services are at best marginal and more sensitive to increased costs or reduced income; and (ii) the tension between low cost/ passenger and high cost/ passenger rural services will make it difficult not to disproportionately cut the less well used higher cost rural services. 5. Localism, and the role of community transport, is most unlikely to step in as bus services are withdrawn: (i) at best there will be a time lag of several years before they will step in, (ii) its coverage will be very limited at best, and (iii) it will require a broadly similar level of support to operate a similar level of service. 6. Reduced budgets due to CSR coincide with a ”perfect storm” of increased costs and reduced revenue from: — BSOG reductions from 2012. — Reduced Concessionary travel scheme reimbursement. — Higher ongoing transport inflation (for many years and likely in the future). when combined with reduced LA revenue support, the prospects for local bus transport are bad; the prospects for rural bus services are far worse. 7. The proportional reduction in rural services is likely to be even greater due to the above factors, and the effect on rural lives and communities will be significant and in many cases irreversible. 8. DCC believes that there is a real lost opportunity, as the potential contribution of bus services towards key agendas—economic recovery, achieving a step change in travel behaviour towards greener modes and health improvement—will be significantly undermined by cuts to bus services, which will also set back, possibly irretrievably, the sustainability of rural communities and rural living for many people. 9. The prospect of a much greater spend on the national concessionary travel scheme than on supporting bus services makes little sense; government needs to rethink the relative worth from financing (a) the scheme, and (b) local bus service support in areas where commercial services do not operate. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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10. DCC is concerned that the national concessionary travel scheme will be underfunded due to CLG’s formula approach rather than transferring known scheme costs from Districts to Counties in 2011–12. 11. Service changes need to be from the start of the new ﬁnancial year to minimise impact, and the CSR timetable allows no time for consultation—which would be of dubious value. In the context of CSR local authorities need to make decisions across the context of all services, and to invite a “single issue perspective” around a single service is not helpful in this context.

1. Background 1.1 Devon County Council (DCC) is very concerned at the effect of the Comprehensive Spending Review (CSR) on its ability to continue the current level of local bus service support. As a rural county, DCC is committed to supporting rural areas and to the sustainability of rural communities and the rural way of life. 1.2 DCC has pioneered a fully integrated approach to passenger transport since 1986, when it brought together the co-ordination and management of home-to-school and college transport, social care transport, public transport and community transport within a single integrated transport unit working corporately across all county council requirements. More recently DCC’s approach has been recognised in the National Transport Awards as Local Transport Authority of the Year in 2006 and 2009, and was Highly Commended in 2010 for its wide-ranging work to improve Accessibility across Devon. DCC continues to develop integration and further economies through pursuing a wider approach across the public sector. 1.3 While accepting the reasons behind CSR, a combination of the extent of the cuts and the nature of continuing government statutory priorities of other Local Authority (LA) spending means that DCC is faced with an almost impossible “choice” of not being able to continue to support rural services in a way which will not reduce rural sustainability and the opportunities and life chances of people living in rural Devon. 1.4 DCC is therefore not able to both fulfil its responsibilities on other statutory service areas and maintain the level of rural bus services which it would like in order to maintain the sustainability of rural communities. 1.5 As a result, DCC is aware that cuts in rural transport will have a significant negative effect on many people living in rural areas, with a resultant loss in Accessibility whether in relation to employment, learning, health or fulfilling basic needs such as shopping. Health benefits from bus services relate to: — access to health appointments, and as an enabler to help early intervention for serious illnesses; and — more general health benefits—both physical and mental—from the ability to “get out and about”. closely aligned to new local authority health improvement roles under new “Liberating the NHS” policy aims. 1.6 In addition, the need to reduce revenue support for bus services post-CSR coincides with a number of factors reducing bus operating income and increasing costs as a result of reductions in government funding.

2. Local Authority Spending Limitations 2.1 The priority of local authority spending on local transport is relatively low compared to other statutory services such as Social Care, where recent high profile court cases mitigate against cutting these services. It’s not just that local authorities have some very difficult decisions to take, it’s that the decisions they are having to take, due to other government-defined statutory responsibilities, are in effect made for them; transport in this context is not statutory—and therefore with reduced budgets is a lower spending priority. 2.2 Greater local government funding flexibility from reduced ring-fencing does not mitigate against this when there is insufficient funding to provide adequately for all responsibilities and for an adequate level of local bus services.

3. Other Negative Inﬂuences 3.1 At the same time as we are considering reductions to public transport services to meet the demands set by CSR, a number of other signiﬁcant drivers are working to reduce operator income and increase costs:

3.2 Bus Services Operator Grants (BSOG) 3.2.1 Government plans for a 20% reduction in BSOG planned from April 2012 will increase bus operating costs by 1.5–2%, or will result in a reduction of commercial services by a similar amount. In isolation one can envisage operators trying to minimise the effects of this; taken with other reductions in grants and higher costs DCC believes that the effect of this reduction in BSOG is unlikely to be contained and that it will result in a direct reduction in services. 3.2.2 Even if passed on as a fare increase, due to elasticity of demand, fares would have to rise by perhaps 5% to compensate. Fares in Devon are already seen to be amongst the highest in the country, and further fare increases would damage the policy aim of achieving step change in travel behaviour. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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3.2.3 The effect of a 20% rise in BSOG on community transport would be similar, but as the sector may be reluctant to reduce their services or significantly raise fares due to their community ethos, it is more likely to result in greater difficulties and greater financial pressures for the community transport sector generally.

3.3 Concessionary Travel 3.3.1 Government proposals to reduce operator reimbursement for the English National Concessionary Travel Scheme (ENCTS) from 2011–12 will have a major effect on operator income and therefore net costs. 3.3.2 In Devon 56% of all bus journeys after 0930 are free journeys by ENCTS passholders. This equates to up to 30% of all operator income; a reduction of reimbursement to operators of 15% will therefore reduce income by 4–5%. However, modelling the recent government draft guidance onto different operators has shown potential reductions in reimbursement of around 30% for some more rural operators. 3.3.3 Given the other factors working against bus operators outlined in this paper, reductions in income of these levels would have a severe negative effect on operators’ ability to continue to operate (a) commercial services at current service levels, and (b) supported contracted services at the current tendered rates. 3.3.4 A further great concern is the cost of ENCTS. DCC estimates ENCTS costs in 2012–13 of £12.35 million to administer the scheme, against expenditure on supporting bus services in the current year of £7.5 million. With declining budgets due to CSR there is the unfortunate prospect of local authorities generally spending far less on providing public transport than they will spend on the concessionary travel scheme. 3.3.5 DCC therefore believes that the government needs to review the balance and relative merits of a declining number of people able to travel for free (as councils can no longer sustain current levels of bus service support) with the need to travel locally even if paying a fare. ie is the ability for some people to travel free more important than the ability to travel at all for many people of all ages? 3.5.6 The scheme appears to be underfunded from 2011–12 due to the CLG formula-based approach, whereas it would have been sensible to transfer the known scheme costs from Districts to Counties. There is also a link between declining ENCTS operator reimbursement (and reduced proﬁtability) and therefore reduced bus service levels; it may be more cost-effective to retain current reimbursement levels to avoid further commercial service withdrawals and further pressure on bus support budgets. 3.5.7 DCC has received many comments from passholders indicating a preference to a half-fare scheme on an improving network rather than free fares on services under pressure and at risk of declining.

3.4 Passenger Transport Inflation 3.4.1 Passenger transport inflation is continuing (as it has for many years) to run at a higher level than Retail Price Index (RPI) inflation. Comparisons of increases in bus fares with RPI over recent years are therefore not entirely helpful. 3.4.2 Transport inflation has increased due to a number of factors including: — increased insurance premiums; — increase staff costs with legislation on part-time workers, increased training requirements for PCV drivers, and (for the community transport sector) changes to minibus driver licensing in 1997; — more expensive vehicles to meet legislation on low emissions and low floor easy access buses; — EU legislation to reduce emissions which has resulted in increasing fuel consumption and fuel costs; and — higher fuel prices.

4. Sensitivity of Rural Services 4.1 We believe that the proportionate cut in rural services will be even larger for a number of reasons: 4.2 Rural bus services are more marginal by nature; with rural commercial services having low margins, they are more sensitive to increased costs and therefore more susceptible to being uneconomic or cut.

4.3 Commercial Services 4.3.1 Rural commercial bus services are at risk from the 20% reduction to BSOG planned from 2012, and the government target to reduce concessionary travel scheme reimbursement. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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4.3.2 With very low margins, it is expected that there will be signiﬁcant commercial service withdrawals in rural areas, which of course cannot be replaced by supported services if the revenue support budget is also under pressure. ie rural bus services are more susceptible to cost increases with lower margins.

4.4 Supported Services 4.4.1 When budgets are limited, there is a tension between well used low cost/passenger services which tend to be urban or inter-urban, and less well used high cost/passenger services typical of rural bus services. 4.4.2 The notion that many rural services are running around largely empty is a common perception; in practice in Devon while there are times when many rural buses may be lightly loaded (there are also times when many roads are empty without being their usefulness being challenged) across the day each bus working is well used at key times; the cost then of operating in deep rural areas off peak is relatively low and is better use of the vehicle than if it was only used in the busy peak times.

5. The Community Sector 5.1 DCC has a history of working closely in partnership with the voluntary transport sector (community transport) since 1986, to use any opportunities to provide services or generally to capacity-build the community transport sector to the benefit of the travelling public, wherever possible. 5.2 DCC experience is that while the community transport sector in Devon provides a range of services of enormous benefit to those communities, to a high standard and aligned to some specific local community needs, the sector is mostly unable to replace a large number of supported bus services in 2011–12. 5.3 The extent of community transport activity required to replace supported services that may be withdrawn is at a level many times higher than current community sector activity in Devon. 5.4 Community transport services tend to have grown up to meet the acute needs of certain sections of the local population only—typically those travelling to health appointments, the disabled and the frail elderly. As, or if, community transport expands to provide services for the general public (ie if it replaces some supported bus services cut by CSR) it is less likely to be able to fund-raise a significant element of the service costs, or rely on voluntary unpaid drivers for a large number of regular services. 5.5 As driver costs make up more than 50% of bus industry costs, and as much of the other community transport operational costs are similar to commercial services (ie insurance, buses, maintenance), the scope for these services to operate at a significantly lower cost than the current supported bus services is limited. It is most likely that supported bus services if replaced by community transport will continue to require a broadly similar level of support to continue. 5.6 Therefore, whether or not, in time, the community sector will be able to step in to widely replace withdrawn services, is as yet not known—but is considered doubtful. 5.7 As community transport services are not ready to take up a high level of activity to replace the likely reduction in bus services, at best there will be a time lag of several years before this will take place, if at all.

6. Aiming for “More for Less”: Other Alternative Provision 6.1 DCC has pioneered Demand Responsive Transport (DRT) including Fare Cars—a pre-booked rural taxi- bus type service at bus fares, currently operating 12 schemes. Compared to conventional bus services, DRT almost always has a higher cost per passenger—it is able to cover a wider area than a conventional bus service however. With its high cost per passenger, DRT does not provide a general low cost alternative to deep rural bus services; costs reduce when more people are using each journey, which in turn are the conditions which make a conventional bus more likely to be cost-effective. In recent years many DRT schemes across the country have been replaced by conventional buses again, and DCC does not see DRT generally as a universal cost- effective panacea to the rural transport problem. 6.2 DCC is currently assessing the concept of Area Integration—ie the cost-effectiveness of integrating all local authority funded services operating in an area, eg: home-to-school transport, adult social care transport, Fare Cars, local rural buses and Ring & Ride DRT services for the frail elderly and disabled. 6.3 Early initial results do not demonstrate large savings from this approach, possibly perhaps as the market is already well co-ordinated by DCC in terms of obtaining value for money on different services from the commercial and community sector market. However DCC is also considering how, or whether, this approach can be further reﬁned to produce savings from variations to this approach. 6.4 Any new Area Integration network is bound to result in a different type of service and different journey possibilities from current established patterns—which in turn risks disrupting the journeys that people currently make by replacing them with different travel possibilities that they may not want to make. 6.5 The Area Integration concept may be further limited as, out of a DCC total annual public transport spend on supported bus services of £7.5 million, only around £1 million is spent on the local or deep rural services cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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which are those which may be considered under these locally-based schemes. The rest of the expenditure is mainly on more strategic interurban routes or urban services.

7. Summary of Likely Effect of Reduced Bus Support

7.1 As outlined above, any cut in LA funding on supported bus services, due to increased costs and reduced income for bus companies from other sources, is likely to result in a proportionally larger reduction to supported services. The proportionate reductions in rural services are likely to be even greater due to the combination of factors outlined in this report.

7.2 While the cost per passenger of rural services tends to be signiﬁcantly higher, these services are still well used, and many rural residents rely on them. 14% of rural households in Devon have no access to a car— 55,000 people. In addition, many other rural households have only one car used by the “breadwinner”, with others in the household heavily reliant on public transport. The Joseph Rowntree Foundation recently identiﬁed that rural transport is the greatest rural deprivation factor, more than rural fuel poverty (A Minimum Income Standard for Rural Areas, 22 November 2010).

7.3 From DCC surveys it is estimated that around 18% of passengers are travelling to work—equating to around 3,000 people a day relying on bus services supported by DCC.

7.4 Signiﬁcant reductions to supported bus services will result in: — many people no longer able to work; — many people no longer able to get out and about to meet their basic needs; — reduced opportunities for the most vulnerable and poor in rural areas; — reduced ability of rural communities to be sustainable; — an adverse effect on economic regeneration and the rural economy; and — undermining efforts to achieve a step change in travel behaviour towards green alternatives.

8. Consultation

8.1 If DCC is to reduce expenditure on supported bus services for 2011–12, to avoid greater cuts than necessary this will require cuts to be in place from April 2012. The alternative, to achieve the same cost reduction later in the year, would require more services to be reduced—which could have been avoided had the changes been planned to come into place in April. It is therefore preferable to start the cuts at the start of the budget year rather than part-way through. Therefore the CSR timetable allows no time for consultation.

8.2 However, if cuts are to be made, it is not entirely clear what real value there would be on consultation, given that the results would be surely inevitable (to retain services)—and therefore of dubious value.

8.3 In the context of CSR local authorities need to make decisions across the context of all services, and to invite a “single issue perspective” around a single service is not helpful in this context.

8.4 76% of bus journeys are on commercial services in Devon; DCC is unable to consult on commercial changes. Recently there have been 200–300 service changes each year; with 56 days notice required to register services with the Trafﬁc Commissioner there is little time to consult in a meaningful way. January 2011

Written evidence from Passenger Focus (BUS 32)

Summary

(a) Reductions to Bus Service Operators’ Grant appear to be more modest than many had expected and will not come in until April 2012. However, the effect of these, particularly on smaller operators, remains to be seen.

(b) It is cuts to the funding of local authorities which seem to be driving the immediate cuts packages, with some authorities proposing radical reductions in tendered bus services. Many of these centre on removing weekday evening services and weekend/bank holiday services—something that will have an impact on passengers who need to travel outside the traditional 9–5 core hours. This is something that could have a disproportionate effect on the more lightly used rural services.

(c) This situation may be exacerbated if changes to the concessionary fares reimbursement regime leave some councils and operators out of pocket. While changes to the reimbursement mechanism are supposed to eliminate the under/over reimbursement scenario we are told by the Confederation of Passenger Transport (CPT) that the recalculation will remove around £100 million from the current budget. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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(d) We believe it is in everybody’s interests that councils arrive at better informed decisions through transparent information and effective consultation. Passenger Focus is doing what we can to catalogue the national picture, encourage best practice in consultation and offer advice and help to local authorities. There is also a need to monitor the impact once the cuts have been introduced with further changes made in the light of experience.

1. Introduction 1.1 Passenger Focus is the statutory watchdog for bus passengers in England (outside London). Under the Passengers’ Council (Non-Railway Functions) Order 2010 it has a duty to keep under review and investigate bus services and facilities. 1.2 Following the Comprehensive Spending Review (CSR) in October 2010, a number of adjustments and reductions to public spending have been announced which are likely to affect local bus services, including: — a 20% cut in Bus Service Operators’ Grant from April 2012; — a 28% cut in funding for local authorities over the period of the CSR; and — consultation on new reimbursement guidance for the English National Concessionary Scheme which, if implemented, could signiﬁcantly reduce the amount of public money ﬂowing to bus operators. 1.3 In a time of cut-backs it is important that the industry does not marginalise the passenger. It is crucial that passengers’ views are sought and taken into account when determining priorities. Passenger Focus—with its independent, evidence based approach—is in a unique position to capture these views. To this end we have summarised some of our most recent research on bus passenger priorities and levels of satisfaction in Appendix A.

2. The impact of the reduction in Bus Service Operators’ Grant, including on community transport 2.1 Prior to the Comprehensive Spending Review announcement in October 2010, widespread concerns were expressed about the abolition of the Bus Service Operators’ Grant (BSOG). In the event a cut of 20% from April 2012 has been interpreted by many of the large bus operators as a more modest and manageable reduction than had been anticipated. We do not have any information about how it has been received by smaller bus companies. 2.2 In some areas there may be opportunities for bus companies to grow their business which could help to mitigate some of the impact of the cuts. Our research on barriers to using the bus in Milton Keynes24 indicated some of the areas on which they will need to focus if they are to do this successfully—see Appendix A for further details of the research. The full report is available at http://www.passengerfocus.org.uk/bus/news-and- publications/document-search/document.asp?dsid=4811

3. 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 3.1 The impact of the reduction in local authority grant support may prove to be more significant for bus passengers. Unlike the changes to BSOG, the reduction has not been deferred to April 2012. With local authorities having to prioritise spending on their statutory duties as they respond to a 28% cut in central government grant, the removal of any ring-fenced public transport funding spending is likely to put further pressure on tendered bus services. 3.2 Passenger Focus has been having discussions with officers of North Yorkshire County Council and this may provide an indication of the type of difficulty that local authorities in rural areas are experiencing. The County Council proposed the wide scale removal of Sunday and Bank Holiday tendered services and the withdrawal of most evening tendered services. Our response to their consultation25 can be found at http:// www.passengerfocus.org.uk/bus/news-and-publications/document-search/document.asp?dsid=4770 3.3 Our investigations show that such cuts are also being considered by other authorities. We believe that this will have an impact on passengers who need to travel outside the traditional 9–5 core hours: for instance, shift-workers and people wanting access to leisure services, evening learning/study activities and/or health care. Some authorities are considering whether demand responsive transport (eg dial-a-ride) can mitigate some of the impacts, but clearly these still require funding. Such cuts could, of course, have a disproportionate effect on the more lightly used rural services.

4. 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 4.1 Our own research26 shows that, perhaps unsurprisingly, there is a high degree of support (96% of those surveyed) for the English National Concessionary Fares scheme. It also found that that older and disabled 24 Barriers to Bus Use. in Milton Keynes, Passenger Focus. December 2010. 25 North Yorkshire County Council service reductions consultation: Passenger Focus response, October 2010 26 England-Wide Concessionary Bus Travel: the Passenger Perspective. Passenger Focus. July 2009 cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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people had been using buses significantly more since free bus travel was extended to cover trips outside their local area. Not having to pay to use the bus was making it easier for older and disabled people to get out of the house, go shopping and take advantage of sport, leisure and recreation opportunities. Findings included: — some (12%) people travelling on free passes were making journeys they would not previously have made; and — more than a third of pass holders with cars (35%) were leaving them behind, preferring to take the bus. The full report is available at: http://www.passengerfocus.org.uk/bus/news-and-publications/document- search/document.asp?dsid=4409 4.2 Bus operators initially claimed that the Government’s proposed changes to reimbursement arrangements on which they consulted towards the end of 2010 would result in a greater reduction of funding than the Government’s estimated £68–132 million, and suggested that this represented a more significant and immediate threat to bus services than the 20% reduction in BSOG. While changes to the reimbursement mechanism are supposed to eliminate the under/over reimbursement, we are told by the Confederation of Passenger Transport (CPT)—following the Government’s announcement—that the recalculation will remove around £100 million from the current budget. 4.3 In response to the financial cutbacks, many local authorities appear to be preparing to scale back their more generous concessionary fares schemes. Cornwall, for instance, is scaling back its 24/7 scheme to the statutory minimum (ie 0930 to 2300 Monday to Friday) from 1 January 2011. Elsewhere, reductions in the hours of operation may in any case be rendered largely academic where evening and weekend services are withdrawn, eg as has been proposed North Yorkshire: a concessionary pass only being of value if there is a bus service available to take the passenger to where they want to go at the time they want to go there. 4.4 There has been much discussion about the decision in 2008 to extend the local concessionary fares scheme into a national initiative. The arguments being whether there were other priorities on which this money could have been better spent and whether additional benefits could have been wrung from operators at the time. Whatever the merits of this argument we are, to coin a phrase, where we are. The scheme has been introduced and it is clear from our research above that cuts will have an impact on mobility. It is crucial therefore that such decisions incorporate a proper impact assessment designed to identify genuine cases of hardship: for instance, disabled/vulnerable passengers who have planned/regular health care appointments before 0930. Having provided such a benefit we feel it incumbent on an authority to assess the impact on marginal/vulnerable groups of passengers before taking it away. We would also want to see discretion being shown where appropriate. For instance, a 0930 restriction will have a disproportionate impact where there is, say, a 0925 service and an hour or more wait until the next service. Finally, it will be crucially important that any decisions to reduce the concessionary fare scheme are communicated well in advance to passengers.

5. How passengers’ views are taken into account in planning bus services, and the role of Passenger Focus in this area 5.1 Passenger Focus has so far carried out passenger satisfaction research in 14 areas of the country and is discussing with operators and local authorities how services can be improved to address areas where satisfaction is low and where an improvement would result in an increase in overall satisfaction levels. We have published this research,27 which is available at http://www.passengerfocus.org.uk/bus/news-and-publications/document- search/document.asp?dsid=4386 5.2 Our research suggests that passengers place a high priority on more frequent buses going to more places and getting a seat (all three of which appear in passengers’ top five priorities for improvement—see table in Appendix A). There is little if any evidence that passengers understand how bus networks are put together, why routes serve the destinations they do, why buses run with the frequency they do and why vehicles with a larger or smaller capacity are used. 5.3 We also know that passengers value a stable service. In Bus Service Changes, published in September 2010, we reported that nationally two thirds of passengers do not find it acceptable to make changes to bus services more than twice a year. Yet in practice it is common for services to change more frequently. More passengers (75%) look at the bus stop than anywhere else to find out when services have changed, and yet as we have seen, too many stops do not even have timetables in the first place (see Appendix A, paragraph 2.1) let alone information about service changes. 5.4 If the typical passenger is unlikely to understand the rationale for the existing network, it is even less clear what opportunities they have to influence it. We are encouraging bus operators and local authorities to feed relevant complaints and comments into their network planning processes, and to consult passenger representatives. 5.5 Nevertheless, we believe that the current climate of service reductions provides local authorities and bus operators with an opportunity to develop an effective dialogue with bus passengers. It also presents an opportunity for a radical rethink: fundamentally reviewing networks which may have evolved over time, 27 Bus Passenger Survey, July 2010 cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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combining budgets with other departments, and looking at new ways of meeting transport need, through new partnerships and more ﬂexible deployment of vehicles and drivers. There is further reference to some of these issues in the Rural Bus Strategy, recently discussed by our Board: http://www.passengerfocus.org.uk/Board_ papers/1011/Nov%2010%20BM%207.2.pdf

5.6 So we wrote to all local transport authorities on 11 November, asking them to let us know if they were contemplating significant reductions to their bus services and drawing attention to the importance of transparency and effective public consultation. We recommended that this should include: — full details of all services for which they propose to withdraw funding, and which services will remain; — figures for the number of passenger journeys affected and the amount of public money expected to be saved, disaggregated by route, day of the week and time of day; — a detailed assessment of the benefits of the current bus services provided and of the impact of the proposed service cuts on bus passengers, on the delivery of their Local Transport Plan objectives, in particular in relation to traffic congestion and parking; — a formal study of alternative options explored and the reasons for not putting them forward; and — a review of the contribution flexible transport solutions could make to mitigating the effects of the proposed reductions in mainstream local bus services.

5.7 To date, out of the 88 authorities we contacted, we have received replies from 20 and have been able to source details of a further 28 via authorities’ websites.

5.8 Our approach to the challenging financial climate is exemplified by our response to the consultation on service reductions in North Yorkshire. The County Council proposed the wide scale removal of Sunday and Bank Holiday tendered services and the withdrawal of most evening tendered services. We responded by saying: — We recognise that the Council has difficult choices to make and has a right to decide locally. — We welcome that the Council is consulting local people on its proposals, rather than simply announcing service reductions. — It is disappointing how little research the Council appears to have done into the impact of such major proposals and how little attempt appears to have been made to look at alternative options prior to consultation. Consultees can ask questions, but in the absence of more detailed information, it is difficult for them to draw many conclusions. — Whilst the current consultation represents a missed opportunity, it is not too late to build a more effective dialogue with local people, explaining benefits and impacts, listening to their views and modifying proposals to respond to their comments. — We would welcome a review by the Council of last bus times, particularly on weekdays and further engagement with the community transport sector to seek cost-effective options for meeting demand by means of flexible transport solutions.

5.9 By contrast, Central Bedfordshire Council invited community representatives to attend a workshop and complete a questionnaire which asks for comments on their approach to meeting people’s transport needs, for example: — Sixteen of the bus services that the Council currently supports require a subsidy for each individual passenger trip of more than £2.50. Is it reasonable for the Council to set an upper limit for such trip subsidy? If so, what should this limit be? — Should there be a minimum number of passengers regularly using it for the Council to support it? If so, how many should this be? — The Council also asks respondents to rank smaller scale, demand responsive, local ﬂexible services (such as taxi-based services, community transport services, car sharing and rural car clubs) according to which is most useful, and seeks comments on inviting the community to provide more transport services itself.

5.10 We have been encouraged by the recognition, from a number of the local authorities that have replied to our letter, of the positive role Passenger Focus can play in facilitating effective consultation, empowering local passengers to engage constructively with their local authority. Wherever possible we are talking to local bus passengers and will use their comments to inform our responses to consultations.

5.11 We would hope that local authorities would take note of local representations they receive, modify their proposals and give feedback explaining their ﬁnal decisions. In any case, the impact of any changes should be monitored and reported in a transparent way, with further changes made in the light of experience. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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APPENDIX A PASSENGER FOCUS RESEARCH 1. Passengers’ Priorities for Improvement 1.1 In March 2010 we published a report on Bus passenger priorities for improvement. Passengers’ top priorities in England (outside London) were: Improvement Priority More buses are on time or within ﬁve minutes of when they are scheduled to arrive 1 Buses run more frequently at times when you want to use the bus 2 All passengers are able to get a seat on the bus for the duration of their journey 3 Tickets and passes are available that entitle you to travel on all bus services in your local area, not just those operated by a speciﬁc bus company 4 Buses go to a wider range of destinations in your local area 5 Bus fares, tickets and passes offer better value for money 6 All bus drivers are helpful and have a positive attitude 7 Accurate timetable and route information is available at all bus stops 8 Tickets and passes are available that entitle you to travel on all types of public transport in your local area, not just buses 9 All bus stops have a well-maintained shelter 10

2 Bus Passenger Survey 2.1 In July 2010 we published the results of our first Bus Passenger Survey, reporting on the views of 18,500 passengers across 14 areas of the country. Key findings were: — Overall passenger satisfaction with their bus journey ranged from 84% to 92%. — The proportion of passengers satisfied was generally lower for the length of time spent waiting for the bus (68%-82%) and whether the bus arrived on time (67–84%). — The proportion of passengers satisfied with the frequency of buses ranged from 59% to 77%. — The proportion of fare-paying passengers satisfied with value for money ranged from 46% to 68%. — Shelters were available at between 54% and 77% of stops; timetables at between 33% and 73% of stops. — The provision of electronic displays showing the arrival time of the next bus ranged from 1% to 47% of stops; the provision of a route map ranged from 2% to 41% of stops. — The proportion of passengers satisfied with “on bus” features such as seating, personal security and comfort was generally high, standing at 70% or higher in all areas. — The two aspects of the “on bus” experience that generally fell below these standards were the information provided inside the bus (58%–73%) and the cleanliness of the inside of the bus (67%–85%). — The proportion of passengers satisfied with the bus driver never fell below 74% in any area, and was often more than 80% or even 90% in some cases.

3. Barriers to Bus Use 3.1 In December 2010, we reported the results of focus groups in Milton Keynes on Barriers to Bus Use. Many found it difficult to get started: identify the routes they needed, find the right stop and work out what time their bus left. Bus stops could be hard to spot, and many had no timetables or shelter from the elements. Poor lighting at bus stops also made participants feel less safe. 3.2 Many found actual bus journey times faster than expected and valued being able to get off right in the city centre rather than having to look for (and pay for) a parking place further away, but the time getting between their home and the stop, and waiting for the bus, gave car travel a significant advantage. This was exacerbated by not being able to rely on buses turning up on time, which some felt made them unsuitable for going to work or other time-critical journeys. More frequent buses were needed in the evenings to give them an advantage over taxis after a night out. 3.3 Participants identified a range of barriers associated with the behaviour of other passengers—fear of crime, anti-social behaviour, poor hygiene and cleanliness—and the requirement to share a confined space with them. Concerns were also raised about bus drivers going too fast. 3.4 They expressed a number of anxieties about fares and tickets, such as the difficulty of buying tickets (knowing where to buy them from, knowing which ticket to buy, the need to have the right money) and the perceived high cost of bus travel for children and families. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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3.5 Smart, clean buses got the thumbs-up, but were not enough on their own to overcome the negative perceptions created by the other barriers. January 2011

Further written evidence from Passenger Focus (BUS 32a) Summary (a) Just under half (42) of England’s 88 local transport authorities (LTAs) have announced specific cuts to their budget for bus services for 2011–12 and in some cases subsequent years, amounting to £43.5 million. Fifteen of these LTAs are making cuts of over £1 million to their subsidised bus services. Somerset is reducing its subsidy by £3.6 million. The largest percentage cuts are in Cambridgeshire, Hartlepool and Stoke-on-Trent, all of which are cutting all of their support for their subsidised bus network. Thirteen authorities appear not to have immediate plans to cut bus services; a further 22 will not be making decisions until after the local elections in May. (b) Some authorities are investing in community transport, but a number of authorities are cutting funding for community transport, including Hartlepool which is ceasing funding for all of its dial-a-ride schemes. We are also aware of 13 authorities that are making cuts to passenger information and advice, creating additional challenges to those faced by all authorities needing to communicate effectively with local passengers about the cuts. (c) Many local authorities are reducing their concessionary fares schemes to the statutory minimum. However, a number are retaining schemes which offer more than the statutory minimum, while Staffordshire is actually enhancing its concessionary travel scheme. Some authorities are reducing support for children and young people. (d) We are aware of ten authorities which have carried out public consultations setting out the specific bus services they are proposing to stop subsidising. Few have provided the public, or even their members, with the detailed impact assessments and options studies we called for when we wrote to them in November. However, a number of councils, including Worcestershire, Surrey and Central Bedfordshire have provided good information as part of their consultations. And Surrey, Telford and Norfolk have all made significant changes in the light of consultation responses from passengers.

1. Introduction 1.1 Passenger Focus submitted evidence to the Transport Committee Inquiry into Bus Services after the Spending Review on 4 January 2011. 1.2 David Sidebottom, the Bus Passenger Director of Passenger Focus, attended the Transport Committee on 25 January to provide oral evidence. 1.3 Following the extension to the Committee’s deadline, we are pleased to submit supplementary evidence.

2. Summary of Bus Service Reductions 2.1 Between 11 November 2010 and 23 February 2011, Passenger Focus carried out a study of budget reductions in English local transport authorities (LTAs). The analysis in this study comes from two sources: — Desktop research: regular checking of LTA websites during this period. — Direct contact: where we have been unable to ﬁnd details on LTA websites, we have made direct contact with LTAs through our network of Passenger Link Managers and Executives. — Written responses to our letter: on 11 November 2010 we wrote to all LTAs, asking them about cuts to services and urging them to consult passengers (see section below on Transparency and Consultation). cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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2.2 Just under half (42) of England’s 88 LTAs have announced speciﬁc cuts to their budget for bus services for 2011–12, and in some cases for subsequent years (see chart below).

Bus service reductions

45 40 35 30 Number of 25 authorities 20 15 10 5 0 Implementing Implementing Still deciding if No indications to cuts (total cash cuts (total cash cuts are required suggest cuts in value known) value unknown) in 2011/12 2011

2.3 Key facts about the authorities detailed in the chart above: — The cash value of the 42 authorities implementing cuts (where cash value is known) equates to over £43.5 million. This figure represents all known reductions in bus subsidy budgets, including cuts to community transport and park and ride schemes, as well as support for tendered bus services. Some authorities have decided on a three-year package of cuts, so the £43.5 million figure includes cuts to be made in 2012–13 and 2013–14; it also includes some cuts which have been proposed but which are yet to be signed off by full council. — 15 of these 42 LTAs are making cuts of over £1 million to their subsidised bus services. The LTA making the largest cuts in cash terms is Somerset, which is reducing its subsidy by £3.6 million. — There are 11 further LTAs which have confirmed their intention to make cuts but for which we do not yet have cash values. In some cases, this is because the authority is still considering its overall and bus services budgets for 2011–12. — Some of the 22 councils still to decide if cuts are required in 2011–12 have said that they will not be making decisions until after the local elections in May 2011. — There are 13 authorities that do not appear to be planning cuts to bus subsidies, community transport or park and ride schemes in 2011. These authorities have been identified as there is either no reference to service reductions in their budgets or because they have told us or publicly announced that they are protecting subsidised services in 2011. The six that have specifically said they will not be making cuts in 2011 are East Riding of Yorkshire, Greater Manchester Public Transport Executive (GMPTE), Kent, Luton, NEXUS and Peterborough. The only two which have said that they are confident they will not have to make service cuts in 2012 are GMPTE and NEXUS. Southend-on-Sea is also included in this number; however it should be noted that they do not fund any subsidised bus services. 2.4 In respect of cuts to support for tendered bus services, the percentage of subsidised routes that the cuts impact upon varies significantly throughout the country. Some areas are seeing small reductions; others are looking at cuts of between 25% and 50%. — The largest percentage cuts are in Cambridgeshire, Hartlepool and Stoke-on-Trent, all of which are cutting the entirety of their support for their subsidised bus network, equating to reductions of £2.74 million, £581,000 and £370,000 respectively. 2.5 Many LTAs are working closely with bus operators to try to find ways of keeping subsidised routes in operation. Encouraging operators to run subsidised routes on a commercial basis will limit the impact the cuts will have on local networks. However, the extent of this practice varies extensively across the country and is subject to the willingness of both the LTA and local operators to find resolutions. — A good example of where this is being done successfully is in Suffolk County Council, which is working with operators to convert subsidised services to run commercially, and have so far successfully converted six services to run commercially. Some options are still being considered. 2.6 Some LTAs are looking to community transport to help mitigate the most severe impacts on passengers of their cuts to support for mainstream bus services. Because LTAs account in different ways for their support cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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for community transport, it has been very difficult to develop a reliable picture of what is happening to community transport budgets. — Some councils, such as Bath & North East Somerset and Suffolk, are creating one-off time limited funding pots for which voluntary and community organisations can submit bids to start up community led initiatives, which could include community transport projects. — Central Bedfordshire Council have specifically assigned £100,000 to be used to stimulate and support the community transport sector in order to reduce social isolation, and to provide mobility options for people unable to use local bus services. — Cambridgeshire are setting aside £1 million out of the £2.7 million saved over four to five years from cutting their mainstream tendered bus services for spending on community transport. In the first financial year this will be about £100,000, rising to around £220,000 per year until 2014–15. 2.7 By contrast, we are aware of five LTAs which are cutting funding for community transport. — The largest of these cuts is being made by Hartlepool, which is ceasing to fund all dial-a-ride schemes, saving £209,000. This cut is in addition to the 100% cut in support for its subsidised bus network. 2.8 We know of 13 LTAs which are reducing the amount they spend on passenger information and advice. These cuts equate to around £1.1 million and include printed material, information at bus stops, closure of travel shops, and reduction in staffing at bus stations. Although relatively small in cash terms, these cuts will have a significant impact on authorities’ ability to communicate service changes to passengers. —InWest Berkshire, the £22,000 cut represents a reduction of 50% to the total budget for information provision. — Lancashire County Council is removing its real-time information service, saving £175,000 and cutting its public transport information budget by £100,000, including a major reduction in the budget for bus stop timetables. Passenger Focus research into Bus Passenger Priorities for Improvement, published in March 2010, indicated that passengers rate the availability of accurate timetables at all bus stops as their 8th highest priority out of 30 attributes, with real-time information rated 12th most important improvement: http://www.passengerfocus.org.uk/bus/news- and-publications/document-search/document.asp?dsid=4393. Our Bus Passenger Survey, carried out across 14 areas of England and published in July 2010, suggested that in some areas as few as a third of bus stops already had timetables: http://www.passengerfocus.org.uk/bus/news-and- publications/document-search/document.asp?dsid=4386. — Some authorities are reducing printed material and moving towards an increased reliance on online marketing instead. For example, Hertfordshire plans to make area travel guides only available on-line. While this form of communication will suit a large proportion of the population, it is important authorities remember that many people, particularly the elderly, do not have access to the internet or are not confident using it to access passenger information. 2.9 During the period 20 December 2010 to 23 February 2011 we have been regularly monitoring LTA websites and checking 2011–12 budgets for announcements on reductions to concessions. This has been particularly challenging to monitor as changes to provisions have often been announced separately to service reductions. When checking budgets it has also been difficult to identify changes as the funding for concessions is not always included within the council transport budgets. Despite these difficulties, we have been able to identify a number of trends in the data we have collated. 2.10 All LTAs previously offering more than the minimum statutory English National Concessionary Travel Scheme entitlements have had to carefully consider their ability to continue funding the optional elements of their concessionary fares schemes. — Many LTAs have subsequently decided to reduce their provisions to the statutory minimum (9.30am–11.00pm) to avoid having to make further cuts elsewhere. — There are, however, some authorities who are retaining a concessionary fares scheme above the statutory minimum, eg North Lincolnshire, Dorset, Telford & Wrekin, Poole and Bournemouth. — Staffordshire Council has actually expanded the concessions it offers and in addition to providing free 24 x 7 bus transport to people of a pensionable age or people with a disability and their carers, under-20s will get the right to travel anywhere within Staffordshire for just £1 per journey. 2.11 A number of LTAs have traditionally offered concessions for young people travelling by bus, ranging from discounted to fully subsidised bus travel. Many of these schemes are now being cut. —InCumbria, for example, they have stopped funding a free travel scheme for children from poor families to save £334,000. — The PTEs in Greater Manchester and South Yorkshire are increasing fares for children and young people. 2.12 Reductions to concessions represent cancelled future spend by LTAs; this ensures they are not committed to funding a service that they are unable finance. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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2.13 It would be possible to calculate the total amount of cuts to concessionary travel in cash terms. We have not done this, because we are concerned that it would have to be based on estimated future usage, and hence potentially misleading. 2.14 While many areas are experiencing cuts to bus services, some of the most severe impacts are being felt in rural areas, despite strong support for improving public transport. Research carried out by Ipsos MORI for the Commission for Rural Communities in November–December 2009 found that a signiﬁcantly higher percentage of people in rural areas (28%) said that improving public transport would improve the quality of life for people living in their area than improving anything else.

3. Notifying Passengers About Bus Service Changes 3.1 With so many signiﬁcant changes to bus services, it is vitally important that LTAs communicate the changes to passengers well before they take effect. In Bus Service Changes, published in October 2010, we reported on passengers’ attitudes to service changes. More than six out of ten (62%) wanted to be given at least four weeks’ notice of major changes. Three quarters (76%) felt that posting a notice at the bus stop would be the most helpful way to let them know about a major change, with 61% supporting the idea of a notice inside the bus and 46% local newspaper articles. Other approaches received less support. A copy of the ﬁndings is attached: http://www.passengerfocus.org.uk/bus/news-and-publications/document-search/document.asp?dsid=4714 3.2 Different LTAs will implement cuts to tendered bus services and reductions in support for concessionary fares at different times. However, many service changes will start to take effect sooner rather than later in 2011–12. — Leicester City Council plans to begin implementing their service cuts from the 2 April 2011. — Thurrock Council plans to start from 4 April 2011. — In areas such as Lancashire, where information provision is being cut alongside subsidies for tendered bus services, passengers face challenges even in discovering that their bus service has been cut and risk learning about this only when the bus fails to appear at their stop. 3.3 We are urging authorities to effectively communicate changes to passengers and will shortly be writing to authorities who have recently announced cuts packages.

4. Transparency and Consultation 4.1 We wrote to all LTAs on 11 November 2010, asking them to let us know if they were contemplating significant reductions to their bus services and drawing attention to the importance of transparency and effective public consultation. We recommended that this should include: — full details of all services for which they propose to withdraw funding, and which services will remain; — figures for the number of passenger journeys affected and the amount of public money expected to be saved, disaggregated by route, day of the week and time of day; — a detailed assessment of the benefits of the current bus services provided and of the impact of the proposed service cuts on bus passengers, on the delivery of their Local Transport Plan objectives, in particular in relation to traffic congestion and parking; — a formal study of alternative options explored and the reasons for not putting them forward; and — a review of the contribution flexible transport solutions could make to mitigating the effects of the proposed reductions in mainstream local bus services. 4.2 We received responses from just 22 of the 88 LTAs that we wrote to. 4.3 Few authorities have undertaken the level of consultation that we recommended in our original letter. Most did undertake some form of consultation prior to publishing their Council’s top level departmental budgets, often by asking residents to prioritise those Council services they most wanted to see protected from cuts. In most cases public transport came high on the public’s list of services to be protected. Other consultations asked residents to comment on the total cash amounts proposed to be cut from different service areas. Bus services were rarely named in these consultations separately; instead people were normally asked to prioritise “public transport” or “transport”. Not all the consultations provided residents with the most helpful options for identifying the services they actually wanted to protect. For example, Redcar and Cleveland Council asked the public to comment on whether they agreed with plans to review Highways, Environmental Services and Subsidised Travel to find savings of £550,000, thus arguably making it harder for people to specify the services they actually wanted to protect. 4.4 Most of the Councils which undertook consultation included their results as appendices to their overall Council budget proposals. This ensured the Cabinet/Executive and Full Council were provided with passengers’ views to help inform their decision-making when agreeing the budget proposals. However, despite our requests, it is not clear if all councils did so. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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4.5 Around a quarter of LTAs have published and consulted with residents on the subsidised bus routes they propose to cut, or plan to do so once they have decided on how much they need to save from their bus budgets. LTAs should undertake this level of consultation with passengers even if they did not consult them prior to setting council budgets. If done successfully, it helps to clearly communicate to passengers the bus services that are to be cut, and presents the opportunity for communities to consider whether they could run any of the services themselves.

4.6 As a result of their responses, and our subsequent enquiries and desk research, we are aware of ten LTAs which have undertaken public consultations setting out the speciﬁc bus services that they are proposing to stop subsidising: — Central Bedfordshire. — Darlington. — East Sussex. — Gloucestershire. — Lancashire. — North Yorkshire. — Rutland. — Shropshire. — Surrey. — Worcestershire.

4.7 Some of these consultations are still live at the end of February 2011. So far we have submitted formal written responses to seven of these consultations. — Following our letter, we were approached by Worcestershire County Council, which was seeking our help in designing a consultation questionnaire. We welcome many aspects of the consultation they are now conducting which contains a clear description of the process adopted by the Council for deciding which services to subsidise, including a full explanation of the criteria for ranking bus routes and an opportunity to comment on it. — We have previously drawn attention to our support for the consultation conducted by Central Bedfordshire Council in which they asked local stakeholder groups to comment on minimum numbers of passengers per service, maximum subsidy levels and to prioritise alternative approaches where mainstream bus services had to be cut.

4.8 A number of Councils have completed their consultations and made changes as a result of comments from passengers: — Surrey County Council reinstated several services which it had proposed to cut, in the light of comments from passengers. It has turned the current ﬁnancial crisis into an opportunity to review its entire subsidised bus network, and to do so in full consultation with passengers and local groups. The review, which covers the county in a number of phases, is the most thorough and inclusive exercise we have yet come across, and includes: — a comprehensive explanation of the process their review will take, with all the associated deadlines; — consultation on new principles for network design, which were modiﬁed in the light of responses from the public; — the application of these revised principles to proposals for changes to bus services; — the publication of colour-coded bus maps showing current and proposed bus routes; and — excellent feedback on changes made following consultation and the reasons for them. — Telford and Wrekin Council published their cuts proposals prior to agreeing their annual budget. Within these they had proposed to reduce their concessionary travel arrangements to the statutory minimum. However following consultation they have worked with Arriva to secure the validity of bus passes from 9am for people living in remote areas who were relying on these services. — Norfolk County Council had proposed closing six park & ride sites in Norwich, saving £2.05 million in subsidies. Following the consultation, in which 116 responses were received (most not supporting the proposal), it was decided to retain the sites: increasing parking fees and reducing facilities at sites, such as toilets, has made it possible to retain the scheme. February 2011 cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Written evidence from the Passenger Transport Group (pteg) (BUS 33)

1. Introduction 1.1. pteg represents the six English Passenger Transport Executives (PTEs) which between them serve more than eleven million people in Tyne and Wear (“Nexus”), West Yorkshire (“Metro”), South Yorkshire, Greater Manchester, Merseyside (“Merseytravel”) and the West Midlands (“Centro”). The PTEs plan, procure, provide and promote public transport in some of Britain’s largest city regions, with the aim of providing integrated public transport networks accessible to all. The PTEs are responsible to Integrated Transport Authorities (ITAs) made up of locally elected representatives of the areas served. Leicester City Council, Nottingham City Council, Transport for London (TfL) and Strathclyde Partnership for Transport (SPT) are associate members of pteg, though this response does not represent their views.

2. Background 2.1 Although far more political and media attention is given to rail, outside of London the bus is the main form of public transport. Indeed for many the bus is public transport. In PTE areas the bus carries 71% of all public transport trips1 and for 33% of households in metropolitan areas who do not own a car,2 the bus is the only available form of transport. The bus is also relied upon by the poorest groups in society: 52% of households in the lowest real income quintile do not have access to a car. This ﬁgure is even higher (64%) for Job Seekers Allowance claimants. 2.2 Bus subsidy is good value for money because it contributes to a broad range of wider social, economic and environmental goals. Buses can reduce congestion, emissions and accidents. The cost to society of car use in congested urban areas has been estimated at above £1/km,3 which, for a typical 5km urban journey, is ten times higher than the current level of bus subsidy per trip (around 50 pence in metropolitan areas).

2.3 Good bus services can also help stimulate job creation and GDP growth. One recent study, based on DfT guidance, showed that a 60% reduction in bus fares and 20% increase in bus frequency in South and West Yorkshire would generate £5 billion worth of GDP benefits alone.4 Altogether this work showed that for every £1 spent by government, such a policy would provide £3 worth of benefits to society (£1 of which through increased GDP). Improvements to bus services that benefit local economies (for example by providing access to new developments) can also be achieved more rapidly and at relatively modest cost (when compared with major investments in road or rail links).

2.4 Philip Hammond (Secretary of State for Transport) has also made the links between worklessness and bus services:5 “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.”

2.5 Often it is those people out of work, or on the lowest paid jobs, who need to travel longer distances, at unsociable hours, and to less accessible locations for work. They are therefore greatly dependent on these types of bus services, which in turn tend to be the most subsidised, in whole or in part, by the public purse.

2.6 These arguments demonstrate that there is a strong long term case for maintaining and increasing current levels of bus subsidy and investment. It is unclear whether government has made an assessment of the full impact of the spending review on the overall reduction in bus subsidies (not just BSOG) on accessibility to jobs and education, on highway congestion and, ultimately on wider government expenditure. Past experience (such as bus deregulation) shows that apparent short-term savings in bus subsidy can lead to a signiﬁcant increase in government spending in the future.

3. Impact of the Spending Review on Bus Network Funding 3.1 The bus services that passengers will have in a few years time will depend on the cumulative impacts of changes in bus subsidy regimes (ie concessionary travel, BSOG, and local authority tendered service budgets), the viability of the commercial network (which in turn is inﬂuenced by the state of the national and local economies) and local authority capital budgets for improvements to bus priority and other measures which beneﬁt bus operations.

3.2 The key outcomes of the spending review for bus: — 20% cut in BSOG from 2012–13, equating to a 2.2% average cut in turnover across PTEs. — Rolling of £223 million Special Grant for concessionary travel and £60 million Rural Bus grant into CLG formula grant in 2011–12. This will be followed in 2012–13 by a 10% cut in the amount of former Special Grant ﬂowing from DfT to CLG. — 28% cuts in local government funding over the period of the CSR (which in turns inﬂuences the ability of local transport authorities to support tendered services). cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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— Very significant reduction in Integrated Transport Block (now half what it was prior to in-year 2010–11 spending reductions) which funds small and medium-size schemes (such as bus priority, interchanges and real time information). — New reimbursement guidance for concessionary travel and resulting estimated savings likely to lead to lower reimbursement for operators. — Impact of public spending on employment, patronage, and hence the viability of commercial bus networks. 3.3 The spending review follows a period where bus subsidy has more than doubled over the past 10 years. However these increases have resulted almost entirely from increases in concessionary travel reimbursement in shire areas (where subsidy almost doubled) and the major increase in subsidy for the London bus network (which more than quadrupled over this period). However, bus subsidy in metropolitan area bus networks has risen by less than 15% in real terms. This factor has contributed to the differences in patronage and fare levels between London and the metropolitan areas: in London, fares have grown by less than 5% in real terms over the past 10 years, whereas the rise has been closer to 20% in metropolitan areas. As a result, in London patronage has increased by more than 50% but in the metropolitan areas, patronage has declined by close to 10%. 3.4 Looking forwards, our estimates suggest that the planned 20% cut in BSOG, along with the transfer of NCTS Special Grant into CLG and the expected cuts in local government funding, could lead to a reduction of more than 40% in the subsidy available to non-concessionary trips across PTE areas, which in turn could give rise to significant service cuts and fare rises. By way of contrast, the reductions in TfL funding from Government are not as frontloaded as they are in the metropolitan areas.6 So not only do these figures show that metropolitan areas have not enjoyed the same levels of subsidy as London, they also show that our areas will also be harder hit by the Spending Review outcomes.

BSOG 3.5 BSOG in general represents very good value for money. The Commission for Integrated Transport found that for every £1 invested in BSOG there were between £3 and £5 of wider benefits. As Transport Minister, Norman Baker, told the House of Commons on 29 June: “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.” 3.6 Although we strongly support the retention of BSOG we believe that in the metropolitan areas better value for money could be achieved by devolving these funding streams to PTEs. This is because PTEs can ensure that the subsidy flows are targeted in a way that reflects local circumstances, opportunities and aspirations, in consultation with operators. For example it might be decided that BSOG subsidies should be targeted at bus priority measures on key corridors. Through this measure journey times would be reduced, passenger revenues would increase, operating costs would fall, and the need for subsidy would also reduce. In other areas it may be decided that comprehensive smart ticketing, or greener buses, are the priority. A win-win situation for everyone. 3.7 This localist approach also avoids the inevitable unintended consequences and windfall payments that result from a flat national “one-size fits all” subsidy regime. For example, at present, BSOG payments are currently being used to incentivise the fitting of smartcard readers and AVL equipment even when this equipment has already been fitted and paid for by PTEs. 3.8 In our view BSOG should only be devolved where it can be ring-fenced for buses (which PTEs are in a position to do as single purpose authorities). There would also need to be extensive consultation with operators to ensure that changes to BSOG were made in as consensual way as possible to ensure best possible outcomes and maintain network stability. 3.9 We understand that DfT will consider reforms to BSOG (including devolutionary options) in the context of the on-going Competition Commission inquiry. But prior to this the DfT have already announced a 20% cut in BSOG as part of the CSR. This would translate into an estimated 2.2% cut in industry turnover in PTE areas. Although operators have given government reassurances that this won’t lead to an increase in fares, there are other ways in which operators are able to recoup this loss of revenue, for example through increases in the cost of subsidised services. 3.10 The reduction in BSOG cannot be treated in isolation from the cumulative impacts of wider changes to funding regimes (as described above). A reduction in one revenue stream to the industry will inevitably lead to an increase in costs elsewhere, either to passengers or the public purse.

Concessionary fares 3.11 In metropolitan areas, PTEs are responsible for administering the National Concessionary Travel Scheme (NCTS) on behalf of the DfT. There is no doubt that this scheme provides older and disabled people with a valuable service, enabling them to retain independence and access key amenities and social cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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networks. A reflection of its success is the fact that demand has been growing at a steady pace. However, the cost of reimbursing operators has also risen with demand and the rise in commercial fares (see paragraph 3.3). As a result, NCTS is taking up a growing proportion of PTE budgets: it is currently estimated that between one third and one half of PTE revenue budgets are now accounted for by NCTS. 3.12 While current funding arrangements have enabled PTEs to cope with the increasing cost of NCTS, a number of changes to funding arrangements coupled with wider cuts to local government budgets could have a dramatic impact on local bus networks. The direct grant, received from DfT by PTEs, has offered the stability needed to be able to secure long term agreements on reimbursement with operators. The agreements mean that PTEs have been able to accurately anticipate how much will need to be spent on concessionary fares and set their wider budgets accordingly. Operators are happier with these arrangements too as is demonstrated by the absence of appeals in PTE areas. 3.13 However, this has all recently changed with the subsuming of direct grant into CLG’s opaque local government settlement. As a result, PTEs will need to find a way to claim the entire cost of NCTS from their constituent districts whilst, at the same time, it won’t be possible for districts to identify how much they have been allocated to fund NCTS. The combination of rising reimbursement costs, withdrawal of direct grant, cuts in wider local government funding along with reduced transparency make for a potentially explosive combination in metropolitan areas. 3.14 The danger is that NCTS will begin to eat into the funding available for concessions to other groups and for wider bus network support, as between one third and one half of PTE revenue budgets are now accounted for by NCTS. This could have dramatic consequences whereby older people in the metropolitan areas end up with a free pass for a quickly vanishing network of services, whilst young people and children face their concessions being withdrawn. More widely, public transport networks would deteriorate with less extensive, more expensive, less integrated and less accessible networks. 3.15 PTEs understand the context within which funding cuts are taking place. Although we support the move towards greater local flexibility by reducing ring fences from grant funding for local authorities, the case of NCTS is clearly an exception as there is no flexibility in providing NCTS—it is a national statutory entitlement. Government has firmly committed to this policy and should, therefore, both provide an adequate level of funding and ensure that funding is effectively targeted at those charged with delivering the scheme. 3.16 We believe that this can be done by reinstating the direct grant element of the funding for NCTS to those charged with administering it. This represents the best option for achieving clear and transparent funding arrangements.

Subsidised services 3.17 Support for non-commercial services represents 22% of bus subsidy in PTE areas and such supported services make up about 15% of our bus networks. These services fill key gaps in the commercial network— for example in the off-peak, in rural areas, to council estates and for shift workers. They also include dedicated school services, community transport and other flexible services providing greater mobility to important segments of the population. 3.18 Many subsidised services are vital for those in search of employment and therefore have much to contribute to the economic recovery and wider government reforms of the welfare system. DWP guidance puts the yearly fiscal, health and crime reduction benefits of getting somebody into employment at between £7,300 and £14,000. Taking the average subsidy per non-concessionary trip to be 37 pence in PTE areas this would equate to an average return of between £44 and £84 for every pound spent, where it enabled somebody to become gainfully employed. 3.19 The ability of PTEs to continue to support non-commercial bus services will depend on their revenue budgets, which in turn is largely dictated by the amount of funding received via the levy from their constituent district councils. As the majority of PTE revenue spend is non-discretionary (with concessionary travel spending making up a significant proportion of that non-discretionary spend), any reductions in revenue budgets will therefore need to come out of discretionary spend—of which supported services (alongside non-statutory concessions) would be particularly vulnerable given their relative size.

Reduction in capital funding for schemes that beneﬁt bus services 3.20 Both the CPT and Passenger Focus argue that greater punctuality and reliability of bus services are key to both better services for passengers and more cost effective operation. Bus priority schemes are one very cost effective way of achieving this as is amply demonstrated in a recent review of evidence by the International Union of Public Transport.7 One of the key sources of funding for smaller public transport schemes (including bus priority) is the Integrated Transport Block, which will be 50% lower next year relative to what it was before in-year cuts to 2010–11 budgets. This measure runs the risk of backﬁring as the reduction in the amount spent by local authorities on highly cost effective local public transport schemes will inevitably lead to higher subsidy requirements in the long term though higher bus operating costs and lower patronage. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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4. Getting Better Value for Bus Subsidy 4.1 Clearly the current arrangements for subsidising the bus industry are highly complex and involve sizeable funding flows. Injecting large sums of public subsidy into what is nominally a free market for bus provision brings with it great complexity, conflict and challenge; is resource intensive to manage; and can make effective scrutiny of outcomes challenging. There is also a significant degree of national prescription and administration of what is essentially a local service. 4.2 As section 3 shows, in general devolution of bus funding flows will enable more cost effective targeting of bus subsidy (where it can be ring-fenced for buses and where a local transport authority is of the scale to manage it). 4.3 One way of achieving both devolution and simplification is through moving to a franchising system (known as “Quality Contracts” in the UK). This would allow existing funding to be channelled to the franchising authority (the local transport authority) where it could be pooled alongside other local funding streams for buses, in order to buy the best possible package of services and outcomes (concessions, integrated ticketing, service quality regime) from the successful franchisee. This is one reason why PTEs strongly support the retention of the powers to introduce Quality Contracts, as set out in the Local Transport Act 2008. 4.4 Outside of a Quality Contract regime the devolution of BSOG, in our view, is perfectly practicable. There are however significant challenges in the pooling of wider bus subsidy flows to achieve better outcomes. This is chiefly because the national concessionary travel scheme is a national, statutory requirement which ultimately operators will expect to be reimbursed for by local authorities. It does not therefore easily lend itself to being merged with other funding flows for the achievement of non-statutory outcomes (such as wider packages of service provision). 4.5 Less complex systems for determining funding and reimbursement for concessionary fares also have obvious attractions in terms of ease of oversight and administration. However, a simpler system (where levels of reimbursement are less graduated and less responsive to local circumstances) will inevitably create more winners and losers, with the overall level of Government funding tilting the axis one way or the other. In other words greater simplicity can result in outcomes which represent poorer value for money for the taxpayer with potentially greater impacts on wider budgets for transport authorities.

5. Planning More Effective Networks 5.1 We believe that it is right that bus users have an independent watchdog to represent their interests and we supported Passenger Focus taking on that role. We do not believe however that it is practical or desirable for a national body with limited staff and resource to become involved in planning local bus networks. The bus network is an accumulation (on a massive scale) of numerous local bus services that have developed over time and which in a deregulated environment change in an incremental way. The bus network is not the rail network—where given the nature of the franchising process it is practical for Passenger Focus to get involved in a relatively limited number of franchising exercises that are undertaken every year. 5.2 Given bus networks are essentially local, it is the role of accountable local transport authorities to take the lead role on bus networks in their areas. It is also worth noting that PTEs operate a variety of passenger forums and other outreach methods of eliciting passengers’ views. However, having said this we believe that Passenger Focus does have an important role to play in advising local transport authorities on good practice in consultation and public involvement, on holding local transport authorities to account where they manifestly fail passengers, and where under a Quality Contract or under other large scale proposals for major changes to a bus network, the scale of the change is such that Passenger Focus can usefully play a role. 5.3 We also believe that there is scope to review the inter-relationships between the various bodies with responsibilities for service monitoring and enforcement, complaints and customer satisfaction surveys. In metropolitan areas this is the Trafﬁc Commissioner, Passenger Focus and the PTEs. We are already working with PF on the potential for common customer satisfaction surveys, and we believe there is further scope for rationalisation and more effective and better value for money ways of ensuring that passengers’ interests are protected. January 2011

References 1 Source: DfT, NTS 2009 2 Source: DfT, NTS 2009 3 Sansom et al, 2001 (http://www.its.leeds.ac.uk/projects/STCC/downloads/SurfaceTransportCostsReport.pdf), 2010 prices 4 Feldman, O, Nicoll, J, Simmonds, D, Sinclair, C and Skinner, A (2008), “Use of Integrated Transportation Land Use Models in the Wider Economic Beneﬁts Calculations of Transport Schemes”, Journal of the Transportation Research Board, 2076 cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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5 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/ 6 http://www.pteg.net/PolicyCentre/FundingGap/CSRnumbercrunch.htm 7 http://www.tﬂ.gov.uk/assets/downloads/businessandpartners/interaction-of-buses-and-signals-at-road- crossings(1).pdf

Written evidence from TAS Partnership Ltd (BUS 37) Executive Summary: Bus Services after the Spending Review Background 1.1 Public Spending on buses has continued to rise in recent years. Spending on supported services outside London has, however, only reached the same level in cash terms as applied in 1984. Developments including the introduction of the English National Concessionary Travel Scheme (ENCTS) have seen a large rise in concessionary spending and there has been a huge increase in spending on bus support in London since 1997. Bus industry costs, driven by wage-related costs, continue to rise significantly above inflation and are reflected in above-inflation fare increases. Despite this, passenger numbers in both PTE and Shire areas have grown since 2007, reversing years of decline. 1.2 Most “subsidy” is not subsidy to the bus operators. Concessionary fare payments to operators result from a subsidy to the user and subsidised services are a contractual arrangement whereby operators are paid to provide a specified level of service at set fares. 1.3 Since introduction of ENCTS the proportions of typical bus company income vary little between the PTEs and Shires—broadly 55% farebox, 24% concessionary reimbursement, 11% local bus support and 10% Bus Service Operators’ Grant.

Assumptions 1.4 Other than the reduction in BSOG of 20% expected from 2012, precise measures of spending reductions are unknown but we have assumed reduction in concessionary reimbursement of 20% (based on example calculations using the revised DfT guidance) and in supported service budgets of 25%.

Outcomes 1.5 Our calculations using the above assumptions indicate that even with an additional increase in fares above the normal level to yield an extra 3% of income, we expect mileage operated to reduce by around 8%. The effects of this will be unequal, with rural and interurban services suffering disproportionately. 1.6 The rate of loss is particular sensitive to changes in concessionary reimbursement levels. Notwithstanding this, we tested a further scenario where BSOG is abolished and local authority support reduced by 50%. This level of reduced spending suggests the loss of almost one in five services. Against this it seems perverse to protect concessionary free travel at all costs when the offer of free travel could be irrelevant if there is no service available to significant numbers of potential passengers. 1.7 There is a risk that services which are currently marginal commercial services would be lost completely if local authorities fail to prioritise spending in the most logical way. There are limits to how far the Community Transport sector could replace the poorest performing bus services given that this sector is also very dependent on local authority grants and support and will see a reduction in BSOG. There will also be risk transfer as access to employment and health services become more difficult due to the lack of public transport.

BUS SERVICES AFTER THE SPENDING REVIEW 1.1 Introduction, Objectives and Structure 1.1.1 This document constitutes evidence provided by the TAS Partnership Ltd (TAS) to the House of Commons Transport Select Committee in response to its call for evidence for its inquiry into the funding of bus services in England (outside London). The objective of this evidence is to provide illustrations of the effect of spending reductions on the provision of local bus services and the likely consequences. 1.1.2 The main body of this report is a brief summary of public spending and trends in public spending, passenger levels and costs of operation. It is accompanied by a series of appendices examining these areas in greater detail. Except where otherwise quoted, ﬁgures are taken from published information from the Department for Transport (DfT), Ofﬁce for National Statistics (ONS) or published operator accounts lodged at Companies House. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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1.2 The TAS Partnership Limited 1.2.1 TAS has been involved over 21 years in numerous projects advising bus operators and local authorities on ideal and attractive bus services and networks. This advice has covered both commercial and subsidised services and networks and we have made submissions to the Competition Commission as part of its ongoing inquiry. While the majority of our work is in the UK, we have also provided advice in areas from Abu Dhabi and Dubai in the Middle East to the Irish Republic.

1.3 Subsidy and Who Beneﬁts 1.3.1 There are three main ways in which national or local government contributes to bus services: — Concessionary fare schemes. — Secured services. — Bus Service Operators’ Grant.

Concessionary Fares 1.3.2 It is quite clear here that the recipients of this subsidy are the passholders themselves who get a personal subsidy entitling them to free travel. Acknowledged by DfT in “Transport Statistics Great Britain” 1.3.3 Legally, payments to operators should leave them with the same level of revenue which would be there if there was no concessionary scheme, irrespective of whether a service is very proﬁtable or not.

Secured Services 1.3.4 There are small proﬁt margins built into contract prices but the main beneﬁciaries of the subsidy are the users of the service. Without the subsidy and under normal fare conditions the service would not be able to operate. Bus operators are just the same as any other commercial business providing a service to a public body at market rate.

Bus Service Operator’s Grant (previously Fuel Duty Rebate) 1.3.5 BSOG refunds a signiﬁcant proportion of the duty paid on fuel, keeping fares lower than they would have otherwise been and helps to maintain the viability of some marginally proﬁtable services.

1.4 Changes in Spending 1.4.1 Figure A below compares public spending levels in 1997 and 2010 adjusted to 2010 prices. There has been a signiﬁcant increase in all areas of spending, with: — 78% increase in concessionary fare funding (driven by the move to ENCTS). — 58% increase in BSOG (driven by rising fuel prices and poorer fuel consumption). — 31% increase in spending on secured services (driven by increased operator costs and a higher proportion of supported mileage). cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Figure A COMPARISON OF PUBLIC SPENDING 1997 AND 2010 (2010 PRICES)28

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400 £million 2010 Prices 2010 £million

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0 Concessionary Fares BSOG London Bus Support Secured Services not London Public Spending Heading

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1.5 Dependence on Public Spending 1.5.1 Table 1 illustrates the typical composition of bus operator revenue from the various sources. Since the full introduction of the English National Concessionary Travel Scheme (ENCTS) the revenue streams in shire areas have altered markedly and there is now very little difference between the proportions in shire and PTE areas. 1.5.2 Prior to the introduction of ENCTS around 75% of income in shire areas came directly from passengers. London remains much more dependent on support payments. The percentages shown in Table 1 are obviously influenced by the volume of passengers in each area, thus Table 2 illustrates the average income per passenger by area type and how this income is made up. 1.5.3 If it is accepted that concessionary reimbursement is a direct replacement for revenue forgone as a result of ENTCS, then between 20 and 22% of operator income is from government support. Obviously, supported services will contribute a certain degree of income either through the farebox or from concessionary reimbursement, but this is difficult to quantity. Nonetheless it is a further sum at risk. 1.5.4 The proportion of secured services varies by local authority and can be already zero (for example Southend) up to 100% (for example, Rutland), but is notably high in some significant local authority areas— around 85% of services in Somerset receive some subsidy.29 Table 1 MAKE-UP OF BUS INDUSTRY INCOME 200910 London PTEs Shires Farebox 48.9% 55.3% 54.0% Concessionary 9.5% 24.0% 24.1% PT Support 35.8% 10.7% 12.3% BSOG 5.8% 10.0% 9.6%

28 Adjusted data using ONS ﬁgures for RPI at April 1997 and April 2010. 29 Source: Local Transport Today 30 Nov 2010 cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Table 2

PER PASSENGER STATISTICS 2009–10 Pax Conc Total Journeys Fare Paid BSOG per Income PT Support Income Area (m) per Pax Pax per Pax per Pax per Pax London 2,238 £0.42 £0.05 £0.08 £0.31 £0.86 PTEs 1,073 £0.67 £0.12 £0.29 £0.13 £1.20 Shires 1,292 £0.83 £0.15 £0.37 £0.19 £1.53

1.6 Spending Reductions

1.6.1 Given the economic situation, to have expected the bus industry to be unaffected by the CSR would be grossly unrealistic. We do not set out here to question policy or political decisions but aim to give some pointers toward the likely effect of reduced spending on buses.

1.7 Estimations

1.7.1 All three main areas of public spending on buses are subject to reduced budgets. As finance committed to supported services is counted as “discretionary spending” these appear particularly vulnerable to reduced budgets as they now make calls on the same blocks of finance which must satisfy statutory requirements or discretionary spending which has a higher political profile, such as day care centres or nurseries.

1.7.2 However, as at the end of December 2010 only one figure for spending reduction was firmly set, that for the definite reduction of BSOG by 20% in 2012. As detailed in Appendix B, we expect concessionary reimbursement rates to fall by around 10% and broadly speaking, reimbursement payments would then reduce by 20% at a 50% current reimbursement rate and we estimate that local bus subsidy budgets will fall by 25% on average, although the actual percentage will vary from authority to authority and may be phased.

1.7.3 We have made estimates of the likely effect of all three changes individually, but in effect we are facing a trichotomy—a combination of deciding the effects of reductions under all three headings.

1.8 Calculations

1.8.1 Table 3 below summarises the results of our calculations. In the BSOG and Concessionary scenarios, as these are blanket reductions across all services, we have also assumed that operators will impose fare increases to produce 3% additional revenue. This is probably the maximum the recessionary market will bear as higher percentage fare increases would meet such passenger resistance that they could be self-defeating.

1.8.2 What Table 3 shows clearly is that the most major threat is posed by the reduction in concessionary reimbursement. To offset this reduction and maintain current service levels would require increases in support budgets in excess of 26% and this is simply not a realistic proposition. Conversely, the reduction in BSOG can be offset by a fares increase and some small reductions in mileage.

1.8.3 Put together, all three reductions in spending would see a signiﬁcant reduction in service provision of around 8%.30 In addition to some negative synergy produced by the combined spending reductions, there can only be one fare increase to offset these as it is unrealistic to expect fare increases to yield 6% net. This would be equivalent to an actual increase of around 11% and would be in addition to the “normal” fare increase needed to offset above-inﬂation cost increases, making the total fare increase around 15% in real terms. Note that even increases of this magnitude would not offset more than around 50% of the reduction income.

1.8.4 The last period when fares increased by this magnitude was in the mid to late 1970s when inﬂation peaked. Then it was established that even in such inﬂationary times large percentage increases were self- defeating and passenger resistance was substantially more than the expected level.

1.8.5 A large fare increase would also be reﬂected in higher concessionary reimbursement payments, but under the revised reimbursement guidance recently produced by DfT this would not be in direct proportion.

1.8.6 We have tested a further “worst case” scenario where local authority support is reduced by 50% and BSOG is abolished. This predicts losses of service in the order of 18Ð19% of all provision. This level is equivalent to eliminating all current secured services and a signiﬁcant number of those currently run commercially. 30 It is notable that applying the same scale of reductions in London produces markedly different results due to reliance on external support. We estimate service reductions in the order of 11%. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Table 3 ESTIMATED EFFECTS OF REDUCTIONS IN PUBLIC SPENDING Shires PTEs % Change in Local % Change in Local % Change in Authority Support % Change in Service Authority Support Service Mileage Needed to Maintain Mileage Likely Needed to Maintain Likely without Current Service without Increased Current Service Increased Levels Support Levels Support 20% Reduction in +2.4% −0.3% +3.2% −0.3% BSOG 20% Concessionary +26.0% −3.2% +29.4% −3.1% Reimbursement Reduction 25% Reduction in N/A −3.1% N/A −2.7% Supported Services Cumulative Effect N/A −8.2% N/A −7.8%

1.9 Cyclical Impacts 1.9.1 Some of the effects of changes will be cyclical yet very difﬁcult to measure, so we have maintained simple calculations in the above, but effects will be that: — Increased fares increase concessionary payments but lead to declining levels of farepaying passengers. — Reduced service levels imply lower concessionary payments and lower BSOG payments but declining levels of farepaying passengers and a further fall in revenue.

1.10 Outcomes 1.10.1 Figure B below graphically illustrates the likely movements in service supply in the event of predicted changes to public spending. We also consider that funding to the Community Transport (CT) sector will reduce from a combination of reduction in BSOG and lower contributions from local authorities. 1.10.2 It appears obvious that rural and interurban services will suffer unduly. These services already often have lower than average reimbursement for concessionary travel (at least because the gap between adult fare and reimbursement is so much larger), are more reliant on BSOG and rural services are much more dependent on local authority subsidy. 1.10.3 There are some obvious approaches taken by local authorities to reduce subsidy budgets: — Blanket removal of evening and Sunday services: — Which can have a major impact on access to employment—some 40% of bus trips after 1,830 are made to and from work.31 — Deleting the most expensive contracts: — Which can also be the best used. — Deleting non statutory school services. 1.10.4 While Figure B suggests a progressive re-categorisation of services, it is more than likely that some current marginal commercial services will be lost without replacement as there is “no more money” to subsidise a replacement. Thus some worse performing services may be retained at the expense of better-used ones. 1.10.5 We are unconvinced that the CT or third sector will have the ability to expand its role to replace more conventional bus services. It will suffer the loss of BSOG and be subject to cutbacks in local authority contributions too. The CT sector often serves particular niche markets or areas of need and individual schemes are not set-up to enable easy transition to serving other demands. 1.10.6 There will be significant impacts on other sectors, such as employment, with increased numbers of potential staff unable to access jobs and some existing employees having to leave current jobs due to lack of public transport. Access to healthcare facilities will also be affected—particularly patients from more rural areas—with increased demands on non-emergency patient transport. 1.10.7 The three areas of combined spending reduction call for a root and branch review, with the commercial operators redefining their commercial networks and local authorities establishing available budgets to decide what additional services to provide. Notwithstanding this, it is clear there will be significant losses of service in the order of 10% with the effects felt very unevenly across the country. 31 National Travel Survey 2009 cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Figure B

EFFECTS OF CSR ON THE STRUCTURE OF BUS SERVICE SUPPLY

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APPENDIX A BUS INDUSTRY TRENDS AND PUBLIC SPENDING 1. Introduction 1.1 This appendix looks at current and past levels of public spending, analyses some key trends and includes some London data for comparative purposes.

2. Background 2.1 Bus operators’ income stems from a number of sources, but can be broadly divided into four income streams: — Farebox—Revenue coming directly from passengers, either on the bus or pre-paid. — Concessionary—Revenue paid by local authorities on behalf of concessionary passholders. — PT Support—Contractual payments made by local authorities to operators to run services which are not commercially viable. — BSOG (Bus Service Operators’ Grant)—Essentially still a rebate of part of the duty paid on fuel. 2.2 Table 4 illustrates the typical composition of bus operator revenue from the various sources. Since the full introduction of the English National Concessionary Travel Scheme (ENCTS) the revenue streams in shire areas have altered markedly and there is now very little difference between the proportions in shire and PTE areas. Prior to the introduction of ENCTS around 75% of income in shire areas came directly from passengers. London remains much more dependent on support payments. Table 4 MAKE-UP OF BUS INDUSTRY INCOME 2009–1032 London PTEs Shires Farebox 48.9% 55.3% 54.0% Concessionary 9.5% 24.0% 24.1% PT Support 35.8% 10.7% 12.3% BSOG 5.8% 10.0% 9.6%

3. Supporting Statistics 3.1 The percentages shown in Table 4 are obviously influenced by the volume of passengers in each area, Table 5 and Figure C illustrate the average income per passenger by area type and how this income is made up. These figures are repeated in Table 6 and Figure D in terms of kilometres operated to give figures relative to the level of service provision. 3.2 However, it must be remembered that the figures expressed per kilometre are influenced heavily by relative bus speeds, which are much lower in London than in shire areas. Thus average total income per passenger in the shires is almost double the level in London, while the situation per kilometre operated is reversed, with total income per km in London being well over twice the average level in the shires. Table 5 PER PASSENGER STATISTICS 2009–1032 Pax Conc Total Journeys Fare Paid BSOG per Income PT Support Income Area (m) per Pax Pax per Pax per Pax per Pax London 2,238 £0.42 £0.05 £0.08 £0.31 £0.86 PTEs 1,073 £0.67 £0.12 £0.29 £0.13 £1.20 Shires 1,292 £0.83 £0.15 £0.37 £0.19 £1.53

Table 6 PER KILOMETRE STATISTICS 2009–1032 Million Conc Total kms Fares per BSOG per Income LA Support Income Area Operated km km per km per km per km London 479 £1.96 £0.23 £0.38 £1.44 £4.02 PTEs 562 £1.27 £0.23 £0.55 £0.24 £2.30 Shires 1,073 £1.00 £0.18 £0.44 £0.23 £1.84

32 Source DfT Public Transport Statistics cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Figure C

AVERAGE INCOME PER PASSENGER BY AREA TYPE33

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Figure D

AVERAGE INCOME PER KM OPERATED BY AREA TYPE33

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4. Declining Market?

4.1 DfT and its predecessors have collected information on passenger numbers since 1950. There has been a signiﬁcant year-on-year decline in bus passenger numbers since the mid 1950s as a result of demographic changes and, most obviously, the inexorable rise in car ownership.

4.2 The following two charts (Figure E and Figure F) look at trends in bus passenger numbers since 1977 in the shire areas and PTE areas respectively. We have indexed the number of passengers to one at the start of each decade to enable comparisons of trends in each 10 year period. 33 Source DfT Public Transport Statistics cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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4.3 It is notable that in shire areas the rate of decline was the highest before bus deregulation in 1986, whereas in the PTE areas there was a period of growth in the first half of the 1980s. This was a result of significant investment, revenue support and fare subvention by PTEs in that period, similar to the recent policies in London. It must also be remembered that one of the principal political reasons for bus deregulation was to curb what the Thatcher government considered to be excessive public spending by the metropolitan authorities. In this it was “successful” with revenue support cut by almost 60% in seven years—from the equivalent of £904 million in 1984–85 to £364 million in 1991–92.34 4.4 Post deregulation the decline continued—broadly at the same rate in the shires, but at a more rapid rate in PTE areas. Among the many reasons for sharp decline in PTE areas was the effect of very significant fare increases in many metropolitan areas as operators adjusted to charging commercial fare levels to replace the previous levels held down by significant financial input from PTEs. 4.5 The decade from 1997 showed a significant slowing of the rate of decline, especially in shire areas and since 2007 there has been an upward trend in both area types. This cannot be explained solely by the introduction of free concessions. At a presentation to Passenger Focus in 2010, Stagecoach Manchester claimed growth levels of 25% in adult farepaying passengers and some of the shire operators—for example Western Greyhound in Cornwall and both Norfolk Green and Konectbus in Norfolk have experienced double-digit growth and fleet expansion. 4.6 This is best illustrated by a couple of photographs of typical operations—in Figure G and Figure H. In each case there is a smart modern vehicle, but the most notable aspect in each is the age profile of the intending passengers—in contrast to the popular misconception that buses are primarily for schoolchildren and old people.

Figure E TRENDS IN PASSENGER JOURNEYS SINCE 1977—SHIRE AREAS

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Figure F TRENDS IN PASSENGER JOURNEYS SINCE 1977—PTE AREAS

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Figure H

KONECTBUS IN NORWICH

5. Demand, Supply and Revenue

5.1 The relationship between demand, supply and revenue in the bus industry is a curious one. The normal economic relationship would establish equilibrium where price, supply and demand balance. But crucially, if the supply increases signiﬁcantly, demand will not automatically follow unless the price alters accordingly.

5.2 It is beyond doubt that in the bus industry if supply increases, so does demand—independent of changes to fare. This appears to be an unexpected result but is easily explained if we place a monetary value on time. Bus journeys are time-based products—the whole bus journey experience is a function of generalised cost, so improved frequency = less waiting time = lower generalised cost. So the overall journey is “cheaper” even if the cash element of the journey is unchanged.

5.3 Under competitive circumstances, standard economic theory would suggest that some of the market would shift and supply would decrease by a suitable percentage in time, maybe by small increments at a time. Supply in the bus business cannot be that responsive. Because of the need to deliver the product at speciﬁc times, it only makes sense to deliver service headways which divide roundly into 60. Outside London these are rarely minor adjustments to headway such as a change from every six minutes to every 7½ minutes, but reducing from every 15 minutes to every 20 minutes or every half hour. These are big step changes.

5.4 No operator would seriously consider operating a service frequency of every 16.7 or every 24.6 minutes. Again there’s a clear reason for this—with services running every 15 or 20 minutes, passengers will time their departures around advertised bus departure times and probably keep their average waiting time down in the order of 5 minutes. Running every 17.6 minutes will result in nobody knowing the scheduled times and passengers effectively turning up at stops at random, thus increasing the average wait time, raising generalised cost and reducing passenger numbers.

5.5 This is all illustrated in Figure I by some simpliﬁed calculations (using standard elasticities) based on a current service carrying 10,000 passengers per day, running every ten minutes and an average fare of £1.50. The graph shows what happens as fare changes, demand alters and attempts are made to match supply and demand.

5.6 Note how the “seats” line, effectively supply, changes in steps. Importantly, it is notable that whenever the supply of seats is adjusted to follow declining demand, it forces another decline in patronage and revenue in response to reduced supply. The dark revenue line (a simple calculation of average fare x no. of passengers) shows that even though supply and patronage fall, representing a declining market, revenue continues to increase. This is how most bus companies have managed passenger decline over the years and why they continue to be viable in the face of market decline. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

Ev 116 Transport Committee: Evidence

Figure I

SUPPLY, DEMAND AND FARE LEVELS

21,000

19,000

17,000

15,000

Volume 13,000

11,000

9,000

7,000

5,000

3,000

£4.60 £4.80 £4.20 £4.40 £5.00 £2.00 £2.40 £3.00 £3.20 £3.40 £3.60 £3.80 £4.00 £2.20 £2.60 £2.80 £1.40 £1.80 £1.00 £1.20 £1.60 Fare

Seats Passenger Demand Revenue (£)

6. Change in Proﬁtability—The Inﬂuence of Congestion

6.1 The simple relationship between demand and supply described above assumes that there are no other influences on service supply, but increasing traffic congestion continues to have a deleterious effect on service provision. This is an “outside” influence which can lead to demands for local authority support. The key issue for local authorities is whether investment in bus priorities to maintain timekeeping (and thus profitability) is preferable to ongoing needs for financial support to services.

6.2 To use a simpliﬁed example: — A half hourly service uses four buses; takes 56 minutes end to end and makes a proﬁt of 10%: — But Peak Congestion is beginning to “bite”, delaying services.

6.3 The ﬁrst action is typically that peak journeys are retimed with extra running time thus: — more hours’ cost are required to provide the same level of service; — longer journey times, longer gaps in service and loss of clockface headways make the service less attractive: — therefore patronage falls; — increased cost and lower patronage means that proﬁts fall.

6.4 Assuming that further adverse effects such as a new trafﬁc scheme and / or all-day congestion slows the off-peak service by seven minutes which now takes 63 minutes end to end, this fundamentally alters the economics of the service: — The service needs an extra bus to maintain the half hourly service adding at least £100K to costs, but most of its time is unproductive. — But slower journeys are less attractive to passengers so patronage falls further. — The extra resource coupled to lower patronage means the service now makes a loss and needs local authority support to continue.

The progression of these results is illustrated graphically in Figure J. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Figure J CHANGES TO SERVICE PERFORMANCE

700000 Needs local authority 600000 support

500000

400000

£s

300000

200000

100000

0 Original Cost Original First Stage First Stage Second Second Revenue Cost Revenue Stage Cost Stage Revenue

6.5 Notably, this principle will work in reverse. If we started with the loss-making supported service using ﬁve buses and taking 63 minutes end to end, then put in bus priorities (or removed a section of route) which saved 7 minutes running time, the operator would save one bus in service, gain passengers as buses would be faster and more reliable, make a proﬁt and therefore remove the need for revenue support from the local authority.

7. Public Spending on the Bus Industry 7.1 Since the early 1980s, public spending in the industry has varied signiﬁcantly. Figure K below shows trends between 1982 and the present day. Spending on concessionary fares has steadily risen over time— notably unaffected by deregulation in 1986—except for a fall in 1993–94 as the level of concession offered was reduced in many areas. Since the introduction of statutory schemes from 2007 onwards, spending on concessions has almost doubled in ﬁve years. 7.2 Net revenue support outside London fell consistently in the years following deregulation but has risen steadily since the mid 1990s. However, the level of support in cash terms in 2010 has only reached 1984 levels again. The change in London is very marked, given that total support was at around £1 million per annum in the 1998–2000 period. London bus support grew to over £700 million per annum in 2009. 7.3 Figure L compares 1997 and 2010 spending under four headings adjusted to 2010 prices. Excluding the extreme change in London, in thirteen years spending in real terms has increased by 78% on concessions; 58% on BSOG and 30% on support outside London. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Figure K TRENDS IN PUBLIC SPENDING 1982 TO 201035 (CURRENT PRICES) 1000

900

800

700

600

500

400 Support Levels £m 300

200

100

91 94 99 002 1982 1983 1984 1985 1986 1987 1988 1989 1990 19 1992 1993 19 1995 1996 1997 1998 19 2000 2001 2 2003 2004 2005 2006 2007 2008 2009 2010 Year

Conc Fares £m Net Rev Support London £m Net Support not London £m

Figure L COMPARISON OF PUBLIC SPENDING 1997 AND 2010 (2010 PRICES)36 1,200

1,000

800

600

400 £million 2010 Prices

200

0 Concessionary Fares BSOG London Bus Support Secured Services not London Public Spending Heading

1996/97 2009/10

8. Subsidy and who Benefits Concessionary Fares 8.1 It is quite clear that the recipients of this subsidy are the passholders who get a personal subsidy entitling them to free travel as acknowledged by DfT in “Transport Statistics Great Britain”. It is the passholders themselves who decide what makes up the market for concessionary travel and associated travel patterns. 8.2 Legally, payments to operators should leave them with the same level of revenue which would be there if there was no concessionary scheme. This is irrespective of whether a service is very profitable or not. Arguments that payments should be low as concessionary fare schemes are simply a way of occupying seats 35 Source DfT Public Transport Statistics 36 Adjusted using ONS figures for RPI at April 1997 and April 2010. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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which would otherwise be empty are fatuous and ignore both the basic rules laid down by the 1985 Act and the fact that in many areas concessionary passengers create the peak of demand. 8.3 There are grave concerns that the recently published DfT guidance on concessionary fare reimbursement does not satisfy this basic requirement and these arguments are taken further in Appendix B. While the main concentration lies with the ENCTS scheme for older and disabled passengers it must be remembered that various concessionary schemes for younger people also exist which partly mask the myriad of commercial arrangements for young people.

Secured Services 8.4 Spending on secured services is almost always justified on social grounds or to meet policy objectives. The inference is often made that it is the bus operators who are being subsidised. While it is true that operators will expand their businesses and make a small profit margin within their contract prices, the main beneficiaries of spending on secured services are the users of the services. 8.5 Without the subsidy and under normal fare conditions the service would not be able to operate. This is reflected by the fact that local authorities usually have a “subsidy per passenger” measure, a measure of affordability to the local authority based on the level of usage. Affordability is also a key issue for users—in most urban or semi-urban areas an adequate supply of public transport already exists in the form of taxis and private hire vehicles, but the fare charged is the key issue. 8.6 The operators have often been criticised for making profit from secured services but in effect payments for secured services which include a profit margin are no different to any other profit-making commercial business providing a service to a public body. As a direct comparison, there is seldom any reference to “huge subsidies” to hospital cleaning firms or waste disposal firms, for example, which provide a service to the public sector at a commercial rate.

Bus Service Operators’ Grant (previously Fuel Duty Rebate) 8.7 Despite the renaming, BSOG effectively remains as a rebate. It refunds a significant proportion of the duty paid on fuel, keeping fares lower than they would have otherwise been and helping to maintain the viability of some marginally profitable services. BSOG is not only fairly simple to administer but also applies a degree of fairness in that it reflects service supply in terms of mileage operated, regardless of whether the service is rural or urban. 8.8 Fuel Duty Rebate was first introduced in 1966 in an era when there was comparatively little variation in fuel consumption between different vehicle types and its basic calculation rebates duty in accordance with the amount of fuel consumed. Thus for vehicles running on conventional diesel it effectively rewards poor fuel consumption. Part of the increase in BSOG spending despite the introduction of lower levels of rebate results from significantly worse fuel consumption by modern vehicles. 8.9 Governments have continued to consider the most appropriate way of restructuring or replacing BSOG. One of the main suggestions has been to move from a mileage-based payment to a per-passenger payment, but this would have the perverse effect of transferring the grant away from rural services towards busy urban services which are already highly profitable.

9. Costs and their Impact on Fares 9.1 A key relationship exists between bus industry costs and fare levels. Income derived directly from fares—either paid by the passenger or from concessionary reimbursement—typically accounts for between 75 and 80% of all income. 9.2 Figure M below shows the breakdown of typical large bus company costs. The majority of costs— 61%—are directly related to wages. Wage costs have risen steadily above inflation for some years. There are three principal reasons for this: — Wages in general are rising ahead of inflation. — Lower productivity—buses suffer the effects of traffic congestion and get slower year by year. — Secondary legislation—for example driver CPCs—have increased the level of non-productive time. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Figure M BREAKDOWN OF BUS INDUSTRY COSTS37

9.3 Figure N below compares the percentage of wage-related total costs in a number of service industries. At face value other businesses ought to come close to the bus industry’s high proportion of wage cost, for example the High Street Banks or Royal Mail, but this is not the case. The main reasons are the point of sale and the time critical nature of the bus industry product. 9.4 In the bus industry, each bus acts effectively as its own business which needs to be manned by its own staff member throughout the day and the times at which it provides its service are critical.

Figure N WAGES AS PERCENTAGE OF COSTS—SERVICE INDUSTRY COMPARISONS38 70%

60%

50%

40%

30%

Wages as % of Total as Wages 20%

10%

0% DHL Next Serco NatWest Country Royal Mail Average John Lewis Travelodge Arriva Cross BAE System Bus Industry Balfour Beatty British Airways

Marks & Spencer Company

37 Source: Bus Industry Monitor 38 Source—annual reports and published accounts cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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10. Operator Trends 10.1 In preparation of evidence to the Competition Commission in 2010 in its enquiry into local bus services, TAS carried out some analysis of published accounts data for a sample of ten operators in diverse areas over the years 1991 to 2008 to point out some overall trends. Figure O shows that there are two distinct periods with different trend patterns 1991–2000 and after 2000. 10.2 From 1991 to 1999 patterns in all variables were fairly constant, although there was a slow decline in staff numbers and turnover began to increase above other variables towards the end of the period. This would imply improving profit margins overall. 10.3 From 2000 onwards a different pattern emerges with fleet sizes slowly reducing and staff numbers showing only a slight decline, but the other variables diverge markedly with year-on-year increases in wages and total operating cost significantly above RPI. Turnover has increased alongside cost increases but at a lower rate up to 2006. It is also clear that wage costs are the principal driver of operating costs—the lines for both variables mirror each other 10.4 The effects of these trends on profit margins are shown clearly in Figure P—this shows margins over the ten operators growing consistently up to the late ‘90s after which margins declined consistently to 2006. This confirms our work for CfIT in 2007 where we pointed out that continuing decline of margins was not an acceptable scenario for the future of the industry. In the last two years operators have increased turnover to remedy this—reflecting fare increases and some passenger growth. 10.5 Figure Q shows trends in four KPIs—Turnover per Bus, Wages per Staff, Staff per Bus and Wages as a percentage of Operating Cost. This throws up some further conclusions: — Turnover per bus has grown markedly since 2000 and is now over twice the 1991 level in real terms, but — Wages per staff have grown at a similar rate. — Wages expressed as a percentage of total operating cost have barely changed in 18 years at between 61 and 64%. — Efficiency improved throughout the 1990s with around a 12% improvement in staff per bus, but from 2000 onwards these efficiencies have been lost so that by 2008 the number of staff per bus is slightly higher than it was in 1991: — Although there have been some improvements in staff conditions relating to maximum driving time, breaks etc. these have not been universal and we suggest that the major cause of declining staff per bus efficiency is slower bus speeds, leading automatically to an increase in staff needed to provide the same level of service.

11. Summary 11.1 In conclusion: — Fleet size has declined on average by over 10% since 2000: — Some fleets illustrated within our analysis have reduced by as much as 40% over 18 years. — Measured in staff per bus, efficiency improvements achieved through the 1990s have been lost over subsequent years, driven mainly by slower operating speeds. — Wages are still the principal cost driver and continue to rise significantly ahead of RPI—estimated at around 2–3% above RPI annually. — Profit margins shrank year on year from 2000 and only growth in patronage and turnover has partially remedied this since 2007. — The average profit margin is 6%. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Figure O OVERALL TRENDS—SAMPLE OPERATORS

2.1

1.9

1.7

1.5

1.3 Index (1992=1)

1.1

0.9

0.7 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year End

Fleet Staff Turnover Op Costs Wages

Figure P TRENDS IN PROFIT MARGINS 1991–2008 (ALL OPERATORS COMBINED)

16%

14%

12%

10%

Profit Margin 6%

0% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year End

% Profit Margin cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Figure Q

AGGREGATED TRENDS IN KEY PERFORMANCE INDICATORS (CONSTANT PRICES)

2.3

2.1

1.9

1.7

1.5

1.3 Index (1992=1)

1.1

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0.7 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year

Turnover per Bus Index Wages per Staff Index Staff per Bus Index Wage as % Cost Index

12. Fares and Operating Costs 12.1 Bus operators have only two potential ways of increasing income streams: — Passengers, — From higher fares or higher volumes or — Increased Subsidy.

In response to rising costs and falling demand, the industry has two choices: — Cut services. — Put fares up.

12.2 There have been many drivers of cost increases: — Labour costs including pensions and other on-costs have increased by 20% in real terms over the last five years. — Significant increases in insurance and property charges—especially driven by an enormous increase in insurance claims on a “no win no fee” basis. — Significant increases in fuel costs in real terms due to poorer fuel consumption, limits on BSOG and increase in the cost of fuel itself. — Lower speeds lead to a decline in productivity. Slower buses mean more resources to provide the same service or less service from the same resource. Productivity has fallen 15% in 10 years.

12.3 In terms of activity to offset these trends it is far easier to increase fares than to adjust service supply. This is partly due to the respective amounts of effort required but also reﬂects the fact that the market is much less resistant to fare increases than to service reductions. Typically a 10% decrease in service supply would be reﬂected in a 6–7% loss of passengers whereas a 10% increase in fares leads to a 3–4% loss of passengers.

12.4 This has led to an increasing imbalance between demand and service supply. Since 1950, demand has gone down by 69% but service levels by only 17%; hence the average bus load has declined signiﬁcantly. It is a simple equation that in a declining market rising costs have to be recovered from fewer passengers. — Average bus loads: — In 1955: 26.9. — In 2008: 10.8. — On a journey costing £2539 to run, the cost per passenger is: — £25/26.9 = 93p in 1955. — £25/10.8 = £2.32 in 2008. 39 In real terms cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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APPENDIX B IMPACT OF CHANGES TO CONCESSIONARY FARES REIMBURSEMENT 1. Locus 1.1 Over 21 years, The TAS Partnership Ltd has amassed extensive knowledge of all aspects of concessionary bus fares, from strategic policy, through scheme design, implementation and review to day-to-day administration. This includes schemes for young people, as well as the more prominent ones for elderly and disabled people. 1.2 We have advised government departments in England, Wales and Northern Ireland on this topic, in addition to bus operators and over 80 local authorities. Our periodic publication “Concessionary Fares Monitor” is the UK’s most comprehensive survey of and commentary on the subject.

2. Overview 2.1 Concessionary fares are a subsidy to individual users—in the case of the English National Concessionary Travel Scheme (ENCTS), this means public funding for the bus travel choices of over eight million older or disabled people throughout England. 2.2 The overriding legislative principle40 is that bus operators should be reimbursed for delivering the public policy by providing concessionary travel, so that they are “no better and no worse off” than they would have been if the policy did not exist. To achieve this, reimbursement is divided into two main elements: (a) revenue reimbursement—the total value of concessionary trips (“revenue forgone”), adjusted to remove the value of additional (“generated”) trips which occur solely because of the reduction in or removal of fares; and (b) additional costs reimbursement—the marginal costs of catering for those generated trips, net of any commercial beneﬁt (eg where more fare-paying passengers result from a higher frequency of service). 2.3 Additional costs have historically been very small in relation to revenue reimbursement. However, as the proportion of generated trips has steadily risen over recent years (owing to both the greater discount of free travel and revised estimates of generation), the importance and scale of additional costs reimbursement have grown dramatically since 2008. 2.4 Total concessionary reimbursement is now a major element in the income of all bus operators; in 2009–10, it comprised some 24.1% of local bus revenue in England outside London.41 For many—especially smaller operators—the proportion of income may be over 30%, but it is unlikely to fall far below 20% for any operator. 2.5 While the principles are clear, a major problem is that there is no ready means of comparing the current situation with that where concessions do not exist. Concessionary fares predated the ﬁrst legislation42, itself some 55 years old, became general during the 1970s and universal from June 2001. We are therefore reliant on estimates of generation, based either on theoretical demand relationships or on increasingly distant historical comparisons.

3. Reimbursement Calculation 3.1 Determination of reimbursement rates remains a local function for each Travel Concession Authority (TCA) and a variety of methods has been used to assess the level of generated travel on which these depend. Unsurprisingly, a wide range of rates results: research by TAS in 2008–09, the ﬁrst year of ENCTS, revealed rates typically in the range 50–65%, with an average (weighted by population) of around 55% of revenue forgone.43 3.2 On 29 November 2010, the Department for Transport (DfT) published more prescriptive guidance on reimbursement, although retaining local discretion in its application. The guidance is based on advice from Leeds University’s Institute of Transport Studies (ITS), but despite ITS leading substantial review and research on the subject, its results lack precision44 and remain arguable. We concur with the view of many operators that DfT, in its interpretation of the latitude in the ITS recommendations, has consistently adopted assumptions or judgments which have the effect of reducing reimbursement payments. 40 Enshrined in Regulation (EC) No. 1370/2007, The Travel Concession Schemes Regulations 1986 (S.I. 1986 No. 77) and, by implication, the Transport Act 2000 (as amended) 41 Source: DfT http://www.dft.gov.uk/pgr/statistics/datatablespublications/public/bus/ tables 0501a and 0502a. This compares with 54.5% of income from all other passenger receipts; the balance is comprised of service subsidies and Bus Service Operators Grant 42 The Public Service Vehicles (Travel Concessions) Act 1955 43 Responses to our survey covered over two-thirds of the ENCTS-eligible population outside London: reimbursement rates ranged between extremes of 43% and 74% 44 We do not seek to criticise the research in general. This comment is made in the context that relatively small variations in certain parameters can have major impacts on calculated reimbursement and the research methodologies do not generally support results at an appropriate level of precision cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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3.3 The default “calculator” model which accompanies the DfT guidance therefore has the virtually universal effect of reducing the amounts of reimbursement to be paid. Moreover, DfT removed some potential adjustments of the calculator to reflect local circumstances,45 following an inappropriately compressed period of consultation on the draft new guidance. The new guidance is not wholly unhelpful, justifiably increasing the emphasis on additional costs. Without going into technical detail, however, we believe it embodies some flawed logic and questionable assumptions and will result in reimbursement failing to meet the “no better and no worse off” criterion. 3.4 More pertinently, if TCAs apply the calculator without substantial modification, it is clear that reimbursement payments to operators will fall substantially for carrying the same volume of concessionary passengers. DfT’s own estimates46 indicate an expected drop of £101 million (outside London, within a range of £68–133 million), or about 13% of all concessionary reimbursement. 3.5 Bus operators generally consider this to be a significant underestimate of the financial impact; our estimates for a number of TCA areas suggest that the typical impact will be an effective reduction in total reimbursement payments in the order of 30%. For an average operator, this equates to removal of 8% of total income. 3.6 Note that this amount comes straight off the “bottom line”—there are no offsetting cost savings. The average bus company pre-tax profit margin47 was 6.2% in 2008, which would turn into a loss were 8% of revenue to disappear. 3.7 If the guidance is followed, it is clear that virtually the whole bus industry will be forced to increase revenue (ie raise fares) and / or make substantial cost savings (ie reduce services) in order to stay in business. The potential effects are examined below.

4. Anticipated Effects 4.1 To offset the impacts of reduced reimbursement, an obvious option is to raise fares, which would have the joint effects of: (a) raising more revenue from fare-paying passengers; and (b) increasing the average fare on which reimbursement is calculated. 4.2 Given its expected size, no operator could realistically recoup the income loss through fare increases alone, but they could make some contribution. However, industry sources suggest that major operators will be most unlikely to adopt this course of action, because: — they are already nervous about resistance to fare increases in the current economic climate; and — it is [rightly] seen as penalising farepaying passengers for something—fair reimbursement—which is speciﬁcally someone else’s responsibility. 4.3 Service cuts will therefore be the primary, if not only, means for operators to address the projected loss of income. These were not considered in the DfT Impact Assessment, which simply notes that: “If this were to occur then there would be passenger disbeneﬁts associated with higher fares and lower service levels. It has not been possible to directly model the reaction of operators to this change.”

4.4 Equally disingenuous is the section on “rural proofing”, which states: “bus passengers in rural areas may be affected more than bus passengers elsewhere in the country and this may raise issues in specific localities. Local authorities already have powers under existing legislation to secure socially necessary services if these are not provided by the commercial market. This provides TCAs with the flexibility to address any specific issues which arise when implementing the new guidance in rural areas.” [Last paragraph of section VI) Specific Impact Tests] 4.5 In the context of contemporaneous statements about budget cuts and a review of local government funding, it is patently ridiculous to expect that additional resources will simply be found from TCAs’ other budgets to support bus services rendered uneconomic simply by changing methodologies, assumptions and reimbursement rates. 4.6 It is important to realise that in order to save 8% of costs, operators would have to withdraw significantly more than 8% of resources, since further revenue will be lost with each service reduction or withdrawal—and that is before any perceptual effects take hold among existing passengers about reductions in service availability or stability, as they see substantial reductions elsewhere on the network. Such a “cycle of decline” is horribly reminiscent of that in the 1970s, the time of worst decline in the bus industry, albeit with somewhat different drivers. 45 Notably to take account of trends in local bus patronage—such as stimulation through marketing—and to vary the sensitivity of commercial patronage reaction to changes in service frequency 46 Impact Assessment—Reimbursement Arrangements for the England-wide Concessionary Travel Scheme (15/12/10) 47 From TAS’ “Bus Industry Monitor”, available online at http://www.tas-passtrans.co.uk/content/index.php cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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5. Preservation at All Costs? 5.1 In the face of the need to make significant cuts to public expenditure, it does seem perverse to maintain free travel for pensioners at all costs and it seems disingenuous to attempt to make savings in this area of expenditure by reducing the amount reimbursed for travel and thus transferring the financial pain from user to supplier. The impacts of this will be increased fares for other bus users, often from households in lower income brackets, as well as loss of services and further modal shift. 5.2 Whilst it is undoubtedly true that there are pensioners who are amongst the poorest members of the population, the concept of most pensioners being in that income bracket is false. Figure R uses DWP data to show that the distribution of pensioners by income band is much more variable with a significantly lower proportion in the lowest income quintile than applies to the general population.

Figure R PROPORTION OF PENSIONERS BY HOUSEHOLD INCOME QUINTILE48

Bottom Top 14% 17%

Next Top 21%

Next Bottom 25%

Middle 23%

5.3 The perversity is, of course, that the price of a free service for all will be loss of all service to some. Given the characteristics of people in that age group, there will almost certainly be direct cost impacts upon other public sectors—not least the health service with increased demands for home visits by GPs and community nursing staff and in non-emergency Patient Transport Services to and from hospitals. 5.4 There will also certainly be an unequal effect in urban and rural areas, with rural services suffering particularly. As a result there is likely to be a signiﬁcant issue of increased social isolation in rural areas.

APPENDIX C CALCULATIONS OF THE EFFECT OF SPENDING REDUCTIONS 1. Description 1.1 Table 7 to Table 10 below show calculations of the percentage changes in funding required or service supplied as a result of spending reductions. This calculation is based on the assumption that a given percentage of revenue shortfall can be overcome by a combination of fare increase and mileage reduction. Any mileage reduction will be accompanied by reduction in revenue which is difﬁcult to quantify. It is to be hoped that such reduction will be achieved by minimising revenue loss. Therefore these estimates are cautious and may be increased by around 20 to 30% dependent upon the revenue at risk and transfer to other services. Table 7 EFFECTS OF 20% BSOG REDUCTION BY AREA TYPE Shire Areas % Change With no Current to Maintain Change in %ge of Current Support Income Income New %ge Levels Budget Farebox 54.0 55.6 +3% 55.6 Concessionary 24.1 24.1 0% 24.1 LA Support 12.3 12.6 +2% 12.3 48 Source DWP Pensioner Series data 2008–09 using data after housing costs are accounted for. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Shire Areas % Change With no Current to Maintain Change in %ge of Current Support Income Income New %ge Levels Budget BSOG 9.6 7.7 −20% 7.7 100.0 100.0 99.7 Consequent %ge loss of service mileage −0.3%

PTE Areas % Change With no Current to Maintain Change in %ge of Current Support Income Income New %ge Levels Budget Farebox 55.3 57.0 +3% 57.0 Concessionary 24.0 24.0 0% 24.0 LA Support 10.7 11.0 +3% 10.7 BSOG 10.0 8.0 −20% 8.0 100.0 100.0 99.7 Consequent %ge loss of service mileage −0.3%

Table 8

EFFECTS OF 20% REDUCTION IN CONCESSIONARY REIMBURSEMENT BY AREA TYPE Shire Areas % Change With no Current to Maintain Change in %ge of Current Support Income Income New %ge Levels Budget Farebox 54.0 55.6 +3% 55.6 Concessionary 24.1 19.3 −20% 19.3 LA Support 12.3 15.5 +26% 12.3 BSOG 9.6 9.6 0% 9.6 100.0 100.0 96.8 Consequent %ge loss of service mileage −3.2%

PTE Areas % Change With no Current to Maintain Change in %ge of Current Support Income Income New %ge Levels Budget Farebox 55.3 57.0 +3% 57.0 Concessionary 24.0 19.2 −20% 19.2 LA Support 10.7 13.8 +29% 10.7 BSOG 10.0 10.0 0% 10.0 100.0 100.0 96.9 Consequent %ge loss of service mileage −3.1%

Table 9

EFFECTS OF 25% REDUCTION IN LA SUPPORT FOR SECURED SERVICES BY AREA TYPE Shire Areas Current %ge of Income Income New %ge % Change Farebox 54.0 54.0 0% Concessionary 24.1 24.1 0% LA Support 12.3 9.2 -25% BSOG 9.6 9.6 0% 100.0 96.9 %ge loss of service mileage −3.1% cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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PTE Areas Current %ge of Income Income New %ge % Change Farebox 55.3 55.3 0% Concessionary 24.0 24.0 0% LA Support 10.7 8.0 −25% BSOG 10.0 10.0 0% 100.0 97.3 %ge loss of service mileage −2.7%

Table 10

CUMULATIVE EFFECTS OF REDUCTIONS IN SPENDING BY AREA TYPE Shire Areas Current %ge of Income Income New %ge % Change Farebox increase producing 3% 54.0 55.6 3% Concessionary spending down 20% 24.1 19.3 −20% LA Support down 25% 12.3 9.2 −25% BSOG down 20% 9.6 7.7 −20% 100.0 91.8 Consequent %ge loss of service mileage −8.2%

PTE Areas Current %ge of Income Income New %ge % Change Farebox increase producing 3% 55.3 57.0 3% Concessionary spending down 20% 24.0 19.2 −20% LA Support down 25% 10.7 8.0 −25% BSOG down 20% 10.0 8.0 −20% 100.0 92.2 Consequent %ge loss of service mileage −7.8%

Table 11

CUMULATIVE EFFECTS OF MORE SEVERE REDUCTIONS IN SPENDING BY AREA TYPE Shire Areas Current %ge of Income Income New %ge % Change Farebox increase producing 3% 54.0 55.6 3% Concessionary spending down 20% 24.1 19.3 −20% LA Support down 50% 12.3 6.2 −50% BSOG abolished 9.6 0.0 −100% 100.0 81.1 Consequent %ge loss of service mileage −19.0%

PTE Areas Current %ge of Income Income New %ge % Change Farebox increase producing 3% 55.3 57.0 3% Concessionary spending down 20% 24.0 19.2 −20% LA Support down 50% 10.7 5.4 −50.0% BSOG abolished 10.0 0.0 −100.0% 100.0 81.5 Consequent %ge loss of service mileage −18.5% cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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APPENDIX D IMPACTS ON THE BUS MARKET Figure S IMPACTS OF CSR ON BUS SERVICE SUPPLY

Commercial Services Intervention Supported Services

2010 • Bid Prices rise to reflect higher operating costs • • Fares rise to retain revenue Bus passenger journeys fall due to • Budget cuts force reduction or from fewer passengers recession withdrawal of those services • • Service levels reduce Operating Costs continue to rise which offer poorest value for above inflation money • Moderate reduction in revenue support budgets

2011 • Revenue reduces due to • Fares rise to retain revenue concessionary fares cuts • from fewer passengers Operating Costs rise above inflation • Costs continue to rise • • Service levels reduce Concessionary Fares reimbursement • Further and more extensive likely to reduce reduction in services procured • Heavy reduction in revenue support due to budget reduction budgets • Isolation and social exclusion increase

2012 • Fuel costs rise due to BSOG • Unit costs increase due to • Bus Service Operators Grant reduction BSOG reduction reduces by 20% • Fares rise to offset the • Costs continue to rise • Operating Costs rise above inflation additional cost • Further service cuts result. • Possible further reduction in revenue • Service levels reduce • Isolation and social exclusion support budgets increase further

APPENDIX E TAKING PASSENGERS’ VIEWS INTO ACCOUNT WHEN PLANNING BUS SERVICES 1. Introduction 1.1 This Appendix provides a brief appraisal of how passengers’ views should be taken into account when bus services are planned. Passenger Focus currently has no statutory role in taking account of passengers’ views: we consider and conclude whether this should change. We also review the wide variety of changes to bus services which may be planned by operators or local authorities and the variety of stakeholders involved in planning bus services.

2. A Range of Circumstances for Planning Change to Bus Services 2.1 Planning changes to bus services takes place at a variety of different levels, depending upon the circumstances. These may include: (a) An operator wishing to introduce a new route and requesting that the local authority introduces one or more bus stops; (b) A local authority wishing to move a bus stop; (c) An operator wishing to introduce a new service to compete with an existing operator on a route; (d) An operator wishing to deregister a service which is not commercially viable; (e) A local transport authority concluding not to continue a subsidised bus service; (f) An operator increasing or otherwise changing its fare structure; (g) A local authority increasing or otherwise changing the fare structure it sets for any subsidised services; cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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(h) An operator wishing to change an aspect of its service such as the type of vehicle allocated, the service frequency, journey time or a minor change to the route; (i) Advertisement of statutory schemes (Partnerships or Ticketing Schemes); or (j) A local authority changing its maximum journey time policy on home to school services. 2.2 One feature of this range of examples is that the initiative for change may come from either an operator or a local authority. Another feature is that planned changes may be perceived as either “a good thing” or “a bad thing” for public passenger transport. In other instances the merit of any planned change will depend upon the perspective of the stakeholder. An example of this is location of bus stops: the majority of the population would like the reassurance of a bus stop within a reasonable walking distance provided that it is not immediately outside their own home. 2.3 A further generalisation is that, at least outside Quality Contracts (QCs) and Quality Partnership Schemes (QPSs),49 bus operators plan changes to enhance their commercial, private sector results whereas local transport authorities plan changes to achieve a balance between provision of both statutory and socially necessary services and available finance. 2.4 Bus operators can afford to make relatively simple judgements about whether planned changes are likely to achieve their financial and non-financial objectives. Local authorities have a more complex series of judgements to make based upon provision of access to a range of services including health, education, employment, health, retail, affordability and impact on different segments of the population. 1.10.8 QCs differ in that, under the Local Transport Act 2008, consultation is specifically described in the statutory guidance.50 The statutory guidance on QPSs is illuminating:51 where an authority wishes to introduce a QPS in order to raise standards the guidance recommends that: — “A QPS is best developed in partnership with all potentially affected operators to ensure that the standards are set at an appropriate and achievable level that will deliver the proposed benefits—including value for money (for passengers and in terms of policy and commercial objectives), growth in patronage, or improvements in the efficiency and effectiveness of operations”. 2.5 This does not suggest that the needs or interests of passengers are put first when a QPS is considered. Rather, a QPS might be described as a compromise between the interests of the operator(s) and the authority(s).

3. A Range of Stakeholders 3.1 Depending upon the identity of the party behind a planned change, there are clearly a range of interested parties: these may include: (a) The operator(s) or local authority(s)—whichever did not initiate the planned change; (b) Passengers using the service(s) where change is planned; (c) Competing operators; (d) Politicians, both local and national, representing people in areas affected by the planned change; (e) Employers, retailers or providers of other services who may be affected by the proposed change. 3.2 Notably, this list does not currently include Passenger Focus or any other passenger representative(s). 3.3 In early 2008 central government consultation took place on options for strengthening bus passenger representation, including the proposal that the new body should be national rather than having a regional dimension. The Passenger Transport Executive Group responded to this by stating that:52 — “we would not favour the establishment of a large regional structure”; — “Bus travel is very local in character”; and — The new body should “act as a credible voice for passengers in the deregulated regions when major problems / issues arise”.

4. The Role of Passenger Focus 4.1 The Local Transport Act 2008 enabled the Secretary of State for Transport to extend the remit of Passenger Focus to include the interests of bus users in England outside London through secondary legislation.53 Passenger Focus currently carries out its objectives54 of “Putting passengers ﬁrst” by: — Gathering information and research; — Working with Government and the industry to ensure the passenger’s voice is heard; 49 Quality Contracts and Quality Partnership Schemes were enabled by the Local Transport Act 2008 50 http://www.dft.gov.uk/pgr/regional/localtransportbill/qcsstatutoryguidance/pdf/guidance.pdf 51 http://webarchive.nationalarchives.gov.uk/+/http://www.dft.gov.uk/adobepdf/165237/299192/qps.pdf 52 http://www.pteg.net/NR/rdonlyres/25BEBB2C-8928–4E23–9E9A-04EFCA05664D/0/pteg_response_DfT_ strengtheningbuspassenger_representation_20080320.pdf 53 The Passengers’ Council (non-railway functions) Order: February 2010 54 http://www.passengerfocus.org.uk/about-us/our-role-and-history.asp cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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— Seeking the views and experiences of passengers to influence journey improvements; and — Focusing on a number of key areas including: — Fares and tickets. — Quality and level of service. — Investment. 4.2 In legislation Passenger Focus has powers to investigate matters and, if it considers it appropriate, may refer findings to an operator of passenger transport services, a provider of passenger transport facilities, a local traffic or transport authority or the Highways Agency. If, after making representations, Passenger Focus considers that it is unable to achieve a satisfactory outcome, it is able to refer the matter to a Traffic Commissioner.

5. Commercial Objectives 5.1 For operators there are clear requirements to submit local bus service registrations—either for new services, variations or cancellations—to the Traffic Commissioners for approval, 56 days before introducing a change to a service (or 21 days where circumstances warrant a short notice request). At this stage the operator is also obliged to provide a copy of the registration to the relevant local authority(s). 5.2 There are circumstances where the operator will not wish to provide anyone with any greater prior notice of its intention to run a local bus service in order to maintain a competitive advantage. An operator engaging in any form of consultation prior to the 56 day period is providing his competitors with additional information to react in the market place. However, many voluntary partnerships or codes of conduct in place already routinely involve operators submitting proposals with more than the statutory notice period. 5.3 The questions of competitive advantage, fair competition and the benefits, rules and boundaries for partnerships have exercised many minds during the Office of Fair Trading Market Study of Local Bus Services in the UK (excluding London and Northern Ireland)55 in 2009 and the current Competition Commission Inquiry into the market.56 In short, no “one size fits all” solution has yet been reached. 5.4 In the ideal world of the virtuous circle (growth in bus use, growth in service provision) then changes made by bus operators are likely to be advantageous for bus users. In these circumstances it can be argued that consultation prior to the 56 day period is unlikely to be necessary. 5.5 In the current times of financial pressure, changes are more likely to be ones which leave gaps in service provision. While it may be ideal for bus users and local authorities if a period of debate takes place before a service is withdrawn or reduced, it has to be asked whether such debate is: (a) Necessary; (b) Likely to change the mind of the operator; or (c) Likely to add to anything which can, in any event, be achieved within the 56 day period. 5.6 From a pure commercial perspective, many operators would argue that the best evidence for passengers’ views is travel patterns, as expressed through cash fares paid on the bus and actual boarding and alighting patterns. On those grounds, they would suggest that further debate is wasteful. 5.7 To supplement their knowledge of passenger travel patterns, progressive operators will also be closely monitoring the opinions of their passengers through a number of media including traditional written or telephoned comments as well as social media such as Facebook and Twitter. This feedback will be used to inform future plans.

6. Value for Money and Accessibility: the Local Authority Perspective 6.1 Local authorities may not apply a pure commercial logic to decisions about the local bus services they support, but they still have value for money considerations. For this reason, although pressure groups and political persuasion may play a part in influencing expenditure recommendations by officers and decisions by members, ultimately most local authorities will use some form of “cost per passenger mile” or “cost per passenger carried” benchmark to assist in determining whether local bus services are sustainable. “Use it or lose it” campaigns allow officers and members to discover whether strength of feeling converts into actual use of a service. 6.2 The Government Code of Practice on Consultation57 understandably recommends that: — Consultation should take place at a stage when there is scope to influence the policy outcome; but also adds that: — Consultation should normally last for at least 12 weeks; and 55 http://www.oft.gov.uk/OFTwork/markets-work/completed/buses 56 http://www.competition-commission.org.uk/inquiries/ref2010/localbus/index.htm 57 http://www.bis.gov.uk/files/file47158.pdf cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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— Consultation should be designed to be accessible to, and clearly targeted at, those people the exercise is intended to reach. 6.3 This type of timescale may be appropriate in conjunction with a “Use it or lose it” campaign. It may also be appropriate in larger, strategic decisions where operators and local authorities work well in partnership. For smaller scale decisions or those which operators feel they are entitled to make on a purely commercial basis, it will be inappropriate. It should be noted that a local authority has a statutory duty to involve representatives of local persons in the exercise of its functions when the Council “considers it is appropriate to do so”. 6.4 Even for local authorities, listening to the views of passengers about plans for one particular route or area runs the risk of failing to take account of the remaining population in the authority—and the whole population is equally entitled to be consulted on policies affecting accessibility and levels of subsidy to local bus services. The natural conclusion from this is that local authorities should only enter formal consultation on the planning of local bus services at a strategic level where policy decisions can be influenced. 6.5 The internet age has improved the ability to collect and analyse the results of consultations—several operators undertake such exercises58 and this principle has expanded to local transport authorities—for example recent consultation by Nexus regarding proposals to amend its secured network.59 6.6 The basic difference in approach between operator and local authority is that the operator is commercially focussed and will optimise service delivery to the majority of its passengers whereas local authorities have more complex specified social criteria to satisfy. Local authorities should consult at a strategic level when and where policy decisions can be influenced. Significant reductions in operator income are likely to put stress on operator—local authority relationships and might not lead to the optimum outcome.

7. The Role of Passenger Focus 7.1 Given that planning bus services encompasses a very wide range of possible circumstances our recommendation is that, in the current legislative environment, it would be inappropriate to formalise a role for Passenger Focus in taking passengers’ views into account in service design. 7.2 There is clearly a difference between formal consultation and the “good practice” of listening to customers. Equally, there are circumstances where a number of operators and one or more local authorities might be working in partnership—either formally, through a QPS, or informally—and are sufficiently confident in their partnership to: — listen to the views of bus passengers on a regular basis; — plan changes based on the views of passengers; — implement changes incorporating the views of passengers; and — tell passengers what changes have resulted from passenger feedback. 7.3 While either a bus operator or a local authority may invite Passenger Focus (or any other appropriate local Passenger Representative body) to facilitate passenger feedback or consultation, any greater role may require Passenger Focus to side either with an operator or a local authority. This would prejudice and undermine Passenger Focus’s independent voice as the passenger representative and limit its ability to influence government and the industry. January 2011

Written evidence from Arriva UK Bus (BUS 38) 1. Arriva is one of the leading public transport operators in Europe, running bus and train services in eleven Member States of the European Union. We welcome the opportunity to respond to the Committee’s invitation for evidence in relation to transport funding and, in particular, as it affects bus services in England outside of London, in the light of the Comprehensive Spending Review (CSR). 2. We note that the Committee will already be familiar with some of the issues due to a degree of overlap with some of the evidence it has heard to date from witnesses at the separate inquiry on Transport and the economy. In preface to our comments on the new inquiry’s terms of reference, viz: — the impact of the reduction in Bus Service Operators’ Grant (BSOG), including on community transport; — 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; — 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; — and how passengers’ views are taken into account in planning bus services, and the role of Passenger Focus in this area 58 See example at http://www.surveymonkey.com/s/red_arrows_news at Go North East 59 http://www.nexus.org.uk/news/2010/north-tyneside-residents-have-their-say-bus-services cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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We would make the overall point that the CSR will not help local transport authorities develop the pro-bus user priorities that our passengers would value above anything else due to the positive effects that such measures have in improving service punctuality—a beneﬁt that surveys consistently show is valued highly by bus users. Instead, authorities’ focus will be moved away from the wider aspiration of how to improve services for passengers towards more internal issues of concessionary fares reimbursement and the tendered service budget and how these sit with competing claims for funding from other elements of stretched county council budgets.

BSOG 3. The reduction in BSOG by 20% will be far from painless despite Ministers’ optimism on this matter.60 Indeed, the Secretary of State himself indicated on 24 November during his oral evidence to the Committee that he is aware of the price sensitivity of bus services and the risk that changes to fares will lead to a loss of patronage, particularly in respect of commercially-operated services. At the oral evidence session of the Transport and the economy inquiry on 7 November, a loss to the industry as a whole of £80 million annually was cited, with a consequent risk that increased fares would incentivise passengers to return to using the car. 4. For Arriva, the reduction will mean a loss of £14 million which will have to be compensated for by above-inflation fares increases, significant service reductions and further efforts to achieve savings from within the business. The BSOG reduction is going to follow in the wake of a similar loss of income from the English National Concessionary Travel Scheme (ENCTS) and will combine with further cost pressures on the industry, notably from higher fuel prices, additional National Insurance contributions from April 2011 and the proposed national changes to pension contributions from April 2012. In combination, all these changes represent a significant headwind for the bus industry to work through. 5. While it is too early to set out precisely what the impact will be on services and fares in 2012 and how much internal cost savings can mitigate the loss of income, some general observations can be made. The first is that we recognise that there is a low threshold for fares increases above which increasingly large numbers of passengers choose not to use the bus. This considerably limits any ability to restabilise the position from fares increases alone. The second is that the bus industry has been taking out costs over a long period of time in response to other changes in market conditions; indeed, most of the major opportunities for cost savings were identified over 25 years ago. As a result, input cost increases, notably those affecting employee costs and fuel, now have a much more direct and significant impact on bus operating costs than would be the case if other options were available to operators through simple efficiency savings. 6. There is thus little scope left in the majority of businesses to find savings of the magnitude required to offset the reduction of BSOG, the loss of concessionary fares income and the extra fuel and employee costs. The consequence is that, unfortunately, large-scale service reductions are bound to feature in a response by the industry. Over three billion journeys are made on buses outside London each year; the loss of BSOG will result in many journeys not being made. Against that, we welcome the decision of the Government that BSOG remains a targeted and administratively-efficient system. This will ensure that the grant continues to directly benefit bus users.

Local Authority Revenue Grants and Rural Bus Subsidy 7. Other than in the context of concessionary fares, which we deal with in the next section, we are not in a position to comment substantively on the extent to which bus services that are currently supported by local authority or the rural bus subsidy are at risk. However, we are aware of the written evidence submitted to this inquiry by the Campaign for Better Transport which suggests that, in some areas at least, cutbacks are likely to be severe with resultant adverse effects on particular categories of passenger and types of bus service. While those are primarily decisions for local authorities, they will impact on operators and particularly if or where tendered work is integrated into or delivered from the platform of a commercial network. 8. At the same time, we note the Secretary of State’s statement on 2 December61 of the intention to establish a Local Sustainable Transport Fund which, amongst other things, would be available for local authorities to submit bids aimed at protecting bus services in rural areas; we await the detailed guidance promised by the Parliamentary Under-Secretary of State on 13 December62 and to subsequent proposals from local transport authorities. While this is laudable, there has to be a risk that services will be at risk unless the Fund and its associated administrative processes is established and operated quickly.

Concessionary Fares 9. Arriva has consistently supported ﬁrst the equalisation of the free travel concession for persons aged over 60 and those with disabilities from April 2006, and the subsequent national scheme introduced in England in April 2008. However, this support always has been conditional upon operators being properly reimbursed in line with UK and EU rules for the cost of providing the concession. 60 House of Commons Oral Questions, 2 December 2010, Secretary of State for Transport’s response to Maria Eagle; and Parliamentary Under-Secretary of State for Transport’s response to Diana Kingston 61 House of Commons Oral Questions, 2 December 2010, Secretary of State for Transport’s response to Julian Smith 62 Written Statement to the House, 13 December 2010, Parliamentary Under-Secretary of State for Transport cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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10. The position of the bus operators in relationship to the English National Concessionary Travel Scheme is entirely different to their status under BSOG. BSOG is a government grant which can be increased or decreased according to the government’s policy, and the bus operators are similarly free to respond commercially as they see fit. By contrast, the legislation surrounding the ENCTS still leaves bus operators obliged to carry ENCTS pass-holders at no charge and at specific times of the day, even if there is a significant reduction in funding. This limits and distorts the commercial responses available and puts disproportionate pressure on service reductions and fares increases for those who pay them. 11. Against this backdrop, the DfT went out to consultation between 17 September and 11 November 2010 on the new Draft Concessionary Travel Reimbursement Guidance and Reimbursement Calculator. The period of consultation was foreshortened in order to fit with the timescales for local authorities to publish their 2011 schemes. Ostensibly this was aimed at putting in place a set of guidelines to remove some of the many points of dispute between bus operators and local authorities over the implementation of the ENCTS on a “no better and no worse off“ reimbursement for the bus operators in each area. 12. Unfortunately, the exercise was also estimated by the DfT to lead to a reduction of between £68 million and £130 milllion in the total costs of funding the ENCTS. Regardless of whether this level of funding achieves a “no better and no worse off“ position for the bus operators (and this is disputed strongly), the guidelines will represent a further significant amount of income being lost to the bus industry. Following representations, some changes to the draft guidelines have been made but, if they are widely adopted, the reduction in funding will still be significant. It will also have an uneven impact with smaller cities and rural areas being particularly affected. 13. The removal of a significant amount of funding for the ENCTS will present a major challenge for bus operators, as well as creating inevitable local tensions between operators and local transport authorities. There is likely to be a diversion of officer time towards solving concessionary fares issues and dealing with any local impacts of service reductions (and cost increases from BSOG) on tendered services at times when local authority money is becoming tighter. Given that concessionary fares money will no longer be separately identified in government funding of local authorities, it will also become increasingly difficult for local authorities to take a balanced view about whether Government funding of concessionary fares is reasonable or not. We share the concern of local authorities that retaining the concession but reducing the amounts paid to secure it will lead to tensions in the system: these will ultimately disbenefit fare paying passengers. 14. This will undermine all parties’ efforts to deliver more effective partnerships—a primary objective of the Local Transport Act 2008. Undoubtedly, even the modified guidelines will result in many services moving from marginal profitability to loss. Operators will have little choice other than to respond by using the commercial levers available to them: fares will rise beyond inflation and many services will be cut.

Passengers’ Views 15. In this section we offer a broad-brush commentary of how passengers influence service provision. Clearly, “planning” bus services can have different meanings and contexts: it can range from a strategic overview undertaken by the operator and involving all relevant stakeholders of an entire network or sections of services within a network; down to cases where individual customers contact an operator with suggestions that may be well-meant but would only be likely to benefit their specific travel needs or aspirations. Customers’ views can be made to Arriva through responses to our annual customer survey and / or complaints or comments through representative organisations, MPs or local councillors and local authority officials. 16. In London, Transport for London has formal consultative arrangements in respect of changes to existing services and the introduction of new services. In the commercial environment outside of London, this function falls largely to operators. For larger schemes or certain types of niche service, eg: Park and Ride, this will almost certainly involve liaison and consultation with the local authority and other relevant stakeholders. One way in which Arriva does this is by carrying out network reviews on its bus services with the aim of improving the utilisation of staff and vehicle resources in relation to customer demand and, where possible, addressing stakeholders’ aspirations. Our experience suggests that growth can be fostered through a combination of simplifying routes, increasing service frequencies and providing good marketing and information. 17. Changes to services are not made lightly as we know that our customers value stability. Within the review process, emphasis is always put on retaining links or ways of minimising any inconvenience to passengers even in circumstances where we have little option but to reduce or even withdraw a particular facility. In some cases, there may be tension between what we in our commercial judgement consider to be an attractive and sustainable network (even where the principles behind a review are supported by our stakeholders) and what passengers or their representatives tell us would best meet their journey requirements. 18. For new services, passenger input to the planning process will depend on the function and customer base of the service. For example, it would be prudent when planning services to areas where there is a high concentration of employers for us to engage with them to promote the use of public transport and sustainable travel incentives for their staff. In introducing any new facility, a sufficient level of local research is carried out to provide the confidence that the service will be used and flourish, but the nature of the commercial market means that it is the passengers (or lack of) that will dictate whether the service will survive. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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The Wider Significance of the Bus Industry 19. Finally, we believe it is worthwhile to draw the Committee’s attention to a recent piece of work commissioned by the industry trade body, the Confederation for Passenger Transport (CPT), from The TAS Partnership Limited on The Value of Buses to the Economy. This research analyses the economic benefit of the UK bus industry broken down into expenditure by bus industry employees; expenditure that benefits suppliers to the industry; and expenditure by bus passengers. 20. The report is short but compelling: bus industry employees spend £2.1 billion per year and contribute £0.57 billion worth of income tax and national insurance; over 54% of all expenditure by the industry to its suppliers is taken up with purchasing fuels, oils and lubricants amounting to over £1.54 billion in costs; while bus users spend on average £29.90 per shopping visit with essential items like food and clothes being the most common purchases. 21. We cite these figures simply to give an indication of the potential knock-on effect of less bus service mileage operated and / or increases in fares to compensate for the diminished income streams that will be available to operators due to the reductions in BSOG and concessionary fares reimbursement income. It would be regrettable if the value of any of the benefits (even allowing for volatility in some of the costs, notably fuel, borne by the industry) that buses facilitate within the wider economic cycle were to be diluted to a significant degree, in addition to the impacts on peoples’ ability to travel (for whatever purpose) or their ability to afford to travel.

Conclusion 22. As a responsible operator that is sensitive to the reality of wider economic pressures, Arriva will do what it can to minimise the impact of reduced BSOG and concessionary revenue on our passengers. However, we also have to meet the aspirations and expectations of our other stakeholders, including our local authority partners, our employees and the Company’s owners. The signiﬁcant loss of income from BSOG and from concessionary fares combined with other cost pressures means that it is not feasible that the impact—loss of service mileage, uplift in fares and decline in patronage—will fall within the range of 1–2% as predicted by the DfT.63 It is the operators and local authorities who will have to decide where their resources are best directed. The effects on services cannot be predicted uniformly across the country but will certainly result in attrition of rural and marginal operations. January 2011

Written evidence from Go West Travel Ltd (Norfolk Green) (BUS 41) Introduction 1. This submission is made by Go West Travel, trading as Norfolk Green, also using the Coasthopper brand for bus services in the North Norfolk Coast area. 2. Norfolk Green (NG) started trading in 1996 and provides local bus services in the rural areas of West Norfolk, North Cambridgeshire and South Lincolnshire, as well as in parts of North Norfolk. 3. NG operates on about one thousand miles of road in an area of 3,500 square miles, and whilst it provides some market town bus services, it is predominately a rural operator. From a standing start in 1996, the company operates 63 vehicles and employs 120 staff. 4. NG has built a network of local bus services, in some cases where none existed before 1996, successfully deploying careful route and product design, selecting vehicles suitable for each route with 100% DDA compliance (five years before legally required), and supporting this with driver training and multi-media marketing and promotion. 5. In this way, NG has experienced consistent year on year passenger growth, including on like-for-like routes during the past five years. The annual rate of growth has slowed during the past six months to 7.8% amongst all passengers, but, significantly, at a higher level of 11.4% amongst those paying fares. 6. This success has been recognised with NG winning a number of UK Bus Awards in recent years, including Winning New Passengers in 2007, Bus in the Countryside in 2008, runner-up Independent Operator of the Year in 2009, and recently judged the UK Bus Operator of the Year for 2010. 7. This submission is based on our experience in an area with one of the highest proportions of population over 60, an area with a strong economy based on agriculture and tourism, including what is reputed to be England’s fastest growing short-stay location, the North Norfolk coast area. 8. In considering the issues to be addressed by the Committee, we have done so in a different order, thereby considering the impacts of the 2011 reimbursement and funding reductions before the 2012 BSOG reductions. 63 Campaign for Better Transport written evidence to the Transport Select Committee submitted in advance of the evidence session with the Secretary of State on 24 November cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Summary of Main Points in the Submission 1. NG is a successful provider of rural bus services and has grown investment and employment consistently in the area. This has been recognised through winning a number of national awards. 2. The changes to the way operators are reimbursed for providing free travel is being changed from April 2011 and some bus operators will be worse off, contrary to the legal principle, established in UK and more recently EU Regulations that we should not be. There will be loss of, or reductions to, services to most users, greater social isolation, increased dependence upon the private car, and job losses in the industry. 3. Local authority support for bus services in NG’s operating area is being reduced as result of funding reductions. This will impact frontline services. There will be loss of, or reductions to, services to most users, greater social isolation, increased dependence upon the private car, and job losses in the industry. 4. The combined impact of local authority funding cuts and simultaneous reductions in reimbursement for carrying eligible people free of charge is likely to lead to significant cuts in bus services. The amenity value of a free bus pass (especially for people over 60) is reduced if service provision is reduced. 5. The Department for Transport’s Impact Assessment on the changes to reimbursement for free travel fails to address these cross-impacts. 6. The reduction in BSOG is arguably something that the industry could assimilate if it was not additional to the cut in reimbursement for carrying eligible people free of charge and local authority grant support for bus services. 7. The change to BSOG from 2012 is in the rate per litre paid to operators. However, litres used will reduce as a result of the 2011 funding cuts, so the financial benefit to H M Treasury will exceed the 20% quoted figure. This will impact service reductions more than would have been the case if the 20% reduction applied to the overall fund for BSOG, based on 2010 payments. 8. The bus industry is essentially localised and it is therefore in the customer’s and potential customer’s interest that planning decisions are taken as close to the market as possible. The necessary professional skills may lie with the local authority or may lie with the operator but a rigid approach to where the responsibility for this activity lies will sub-optimise outcomes. 9. The role of Passenger Focus in bus service planning is therefore very limited. However, it does have a strong and important role in providing market signals from its evidenced-based research. 10. As public funding for bus services is being reduced, a reduction in the cost base of bus operators would help retain bus services that are otherwise at risk of being lost. The past decade has witnessed a growing regulatory burden that, left as it is, will lead to greater bus service loss than would otherwise be necessary as a result of the reductions in funding alone. The case for urgent reduction of this regulatory burden is clear.

The financial impact of free off-peak travel for older and disabled people on Norfolk Green 1. NG recognises the significant social, environmental and economic benefits derived from free travel for older and disabled people and recognises that it is the Government’s prerogative to develop such policies. 2 However this is underpinned by the legal principle that reimbursement to operators should ensure that they are neither better nor worse off, as a result of implementing Government’s social policy. This principle was first developed in Circular 1/1986 for what were then local authority discretionary schemes, but reinforced by EU Regulation 1370/2007. 3. Determining the correct reimbursement to ensure that this is so is not a precise science. The most appropriate macro measure of whether this is being achieved is to measure profit levels since the introduction of the mandatory scheme in 2006; since when they have fallen. This is not the same issue as whether or not profits are excessive, and it is not for the Department to use reimbursement to reduce profit levels that it may itself regard as excessive. 4. For NG, reimbursement under the new arrangements from April 2011, will potentially reduce by some 37%, equal to over 8% of total turnover and exceeding total profit in the entire business. 5. In September 2010, the Department opened consultation on a new reimbursement calculator, and for us this would have reduced reimbursement by a more manageable 10%. The significant worsening of the position arose from the Department issuing a further new calculator on 30 November 2010 following its consultation. In the latest calculator an element in the model was arbitrarily withdrawn even though such withdrawal was not subject to consultation. 6. The Department’s Interim Consultation Response, issued on 29 November, justifies the withdrawal of this part of the model, not because it has concluded that the rationale for it being included was wrong, but rather that the adjustment is “not easy to use” (paragraph 2.11). It gave no prior indication that it may conclude thus, but now the calculator is fixed and, it says, the principle cannot be revisited. Further, the Department’s own Impact Assessment on the impact on bus service levels is vague and ill-considered. At a workshop for operators on 26 October, the department’s Chief Economist told operators they could challenge DfT in Court if they are cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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unhappy with the calculator; it is not the role of Government to postulate payment based on little or flimsy evidence, even if it probably breaks the legal principle of reimbursement practice for social policy and then invite businesses to see it in Court. In the case of SMEs in particular that is as unrealistic as it is offensive. 7. The Department’s Guidance makes clear it is for local authorities to negotiate with operators to establish appropriate reimbursement, taking account of local evidenced data. However, they are paid on the basis of the calculator, and in the case of Norfolk County Council it calculates that it will receive 38% less funding for this purpose than the Districts spent in the former scheme. If they do not have the funds they cannot realistically negotiate appropriate reimbursement. 8. An analysis of funding for reimbursement from DCLG to local authorities indicates that seven new TCAs have funding cuts ranging from 31% to 50%. In each case they are either in tourist “honeypot” areas (for which additional ring fenced funding was allocated in 2008 when free travel became national rather than local) or areas where bus travel characteristics would have been particularly taken account of in the element in the model that was arbitrarily withdrawn (see 5 and 6 above). 9. It is therefore almost guaranteed that local authorities will not be able to meet the legal “no better off, no worse off” principle and that operators will suffer real loss of profit. Under these circumstances, operators may regard their “social contract” with Government to have been broken by Government and for them to make their priority to safeguard profits in order to fund future investment levels. In these circumstances it is more appropriate to take immediate action to reduce service levels in accordance with new income than to engage in time consuming and uncertain recourse to the Courts. 10. Thus, NG will reduce bus services from April 2011. Work is now underway to identify the extent of those reductions but those communities where there is a high level of free travel use will be hardest hit, possibly including complete loss of service.

The impact of the reduction in local authority support to bus services 1. All three Counties in which we provide local bus services have indicated to us that their funding for local bus services will be reduced from April 2011. In Norfolk, NG has been told to reduce contract prices by some £120k, whilst Lincolnshire has to reduce funding for the entire bus network by £1.4 million, and we await a precise figure from Cambridgeshire but have been told there will be cuts. 2. The extent of this for NG is in the order of £240k. We are currently evaluating the impact on bus service provision and in negotiations with each of the local authorities concerned. This will impact the delivery and extent of bus services for consumers. 3. There is a correlation between income derived from reimbursement we receive for carrying older people free of charge and that for local bus service support. In two-tier authority areas, from April 2011, for the first time, the same tier will be responsible for both payments. This offered the opportunity for a cohesive single approach to funding, especially in rural areas, for the first time. That has been lost by the apparently uncoordinated approach of DfT and DCLG to simultaneous overall funding cuts to the industry. 4. Thus, authorities that are cutting their support budgets anyway are less likely to be able to additionally fund the shortfall in free travel reimbursement under that scheme (see above section). 5. The impact to be considered, therefore, is not so much that arising from either one or other budget heading but the combined impact. The early indications are that this will be severe and especially so in an operation such as ours, with rising fare paying passenger trends (which is particularly penalised in the Department’s reimbursement calculator) coupled with a higher proportion of residents over 60 living in a rural area and therefore required to travel longer than average distances in order to access their basic goods and services. 6. It is the combined impact of these reductions in funding that the Department should have considered in its Impact Assessments but has failed to do, regarding them as separate and unlinked changes, each marginal in nature. But this is not the case, certainly not with the demographic of our operating area.

The impact of the reduction in Bus Service Operators’ Grant (BSOG) on bus services 1. The 20% reduction in grant from April 2012 is maybe less than had been anticipated, and is being introduced later than was anticipated and to that extent the Department’s intervention is helpful in this respect. 2. The impact of the reduction to reimbursement and funding for local authority contracts in April 2011 will reduce miles operated, and hence the number of litres of fuel used and level of BSOG claim. As the 20% reduction is in the rate per litre paid, the reduction in funding from 2010 to 2012 will thus be greater than the 20% headline ﬁgure included in the Comprehensive Spending Review. 3. The impact of the BSOG reduction would therefore be more equitable and reasonable had the 20% reduction applied to the total fund available rather than the rate per litre payment. It can therefore be deduced that there will be a greater impact on bus service provision than would have been the case had the 20% been applied to the fund for payments made in 2010. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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4. For NG, based on our 2010 claim, we anticipate that BSOG reduction will cost us £120k. Added to the other funding cuts indicated above this will impact our bus network signiﬁcantly because it is incremental upon the other reductions.

5. The Committee should be clear that BSOG used to be known as Fuel Duty Rebate. Fuel Duty is paid by the bus industry as it is by other road users, but then a proportion is reclaimed. This is unlike rail, internal air and ferry operations on which no fuel duty is paid at all. In this respect the reduction in BSOG targets discriminatorily those who use buses compared to other public transport modes.

6. NG will seek to take account of this 2012 impact when assessing service levels for April 2011 as it believes that, painful to all users though the service reductions will be, it is better to face the cumulative impacts in one cut in provision rather than sapping customer conﬁdence by repeated cuts.

How passengers’ views are taken into account in planning bus services and the role of Passenger Focus

1. The bus market is localised and changes tend to be subtle and individually small in scale. For this reason the planning of bus services has to be equally localised and responsive.

2. In larger rural counties there is a danger that centralised decision-making, being distant from the market, will tend to be unresponsive. It is therefore essential that, if fare-paying passenger volumes are to be maximised, those that both know the market best and possess the necessary professional skills, make the decisions about the planning of bus services. These qualities will tend to be present in an individual with appropriate skills, and this skill-base is not widely available. The individual may be employed by the local authority or the operator. A ﬁxed approach to where responsibility should lie is therefore unhelpful and the best interests of the customer not met.

3. In NG we encourage and receive frequent feedback from customers and potential customers through a variety of media. It is for precisely this reason that as a policy we do not promote the Traveline enquiry facility preferring to provide the necessary staff ourselves to interface with our existing and potential customers.

4. This bottom-up approach tends to diminish the role of Passenger Focus (PF) in engaging in this ﬁeld of activity. Its representation of the bus passenger is new and therefore its value unproven, yet its input should be welcomed and the importance of its role recognised.

5. A valuable role will, we believe, emerge for PF in providing evidenced-based research to inform decision making, but that is fundamentally different from involving it in decision making itself.

6. We would resist the tendency evident over the past decade or more to increasingly over-regulate the bus industry and see PF as potentially providing valuable assistance rather than a regulatory role.

The impact of regulatory burden as public funding is reduced

1. It is clear that 2011 and 2012 will witness a signiﬁcant reduction in the public funding for bus service provision and that the industry will contract in some areas, bringing real hardship to some, more isolated, rural bus users.

2. Yet the past decade or more has been characterised by a surge in regulatory control of the industry, all of which has increased the cost burden whilst, in some instances, adding little (if anything) to quality standards in the industry, or to its customers or employees.

3. At a time when the state is reducing funding for bus services, the need to review and reduce the regulatory burden cannot be overstated. This is not to suggest that safety standards should in any way be diminished, but rather that regulatory interventions that have brought no tangible beneﬁts should be scrutinised for repeal.

4. It is recognised that this is not within the terms of reference of this Inquiry but as the funding reduces, and applying the principle of “no better off, no worse off” the industry cost base can be reduced, and bus services saved, if the regulatory burden is eased.

5. The impact of the funding reductions can therefore be minimised, with its impact on social isolation and job losses minimised as well, if a thorough and immediate reduction of the regulatory burden on the industry is commenced. January 2011 cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Written evidence from the Local Government Association (BUS 47)

Thank you for inviting the Local Government Association to submit written evidence to your enquiry.

The LGA is a voluntary membership body and our 422 member authorities cover every part of England and Wales. Together they represent over 50 million people and spend around £113 billion a year on local services. They include county councils, metropolitan district councils, English unitary authorities, London boroughs and shire district councils, along with ﬁre authorities, police authorities, national park authorities and passenger transport authorities.

Summary — The spending review outcome for bus subsidies is almost certain to reduce network coverage and increase fares. — It is extremely difﬁcult to predict how the reduction in services and the increase in fares will play out, and impossible for councils or the government to control it. — That is because the 60% of the bus industry’s turnover contributed by the taxpayer is subject to only very weak conditions about the services the public get in return. — The large cuts in subsidy proposed by the spending review ought to have been accompanied by reform to the subsidy system that would have allowed councils to manage the impact of the cuts and mitigate the worst effects in line with the views of passengers and voters. — It is not too late to press ahead with reform of the subsidy system; and without reform, the subsidy cuts will produce worse outcomes for passengers than would otherwise be the case.

Impact of Spending Review The spending review will affect bus passengers by making it harder for councils and operators to maintain the current number of routes and by increasing fares. Neither effect can be either predicted or controlled by councils, or national government.

The following table shows how public funding supported bus services in England in 2008–09. Nearly two- thirds of the entire turnover of the industry is derived from public subsidy:64 Source of funding % of industry turnover Bus Service Operators Grant 25 Public subsidy for concessionary fares 25 Public Transport Support* 10

*includes funding for London, Rural Bus Grant, challenge and Kickstart funding which are already devolved to local transport authorities. Source: Public Transport Statistics Bulletin GB 2009 supplementary edition, DfT

The spending review affects the industry’s subsidy as follows: — BSOG will be cut by 20% from 2012–13 to save £300 million. This is equal to over 6% of the industry’s turnover. Operators have indicated that they expect bus fares to rise by up to 2% as a result of the cut to BSOG. We do not understand the arithmetic that underlies this figure, but it suggests that most of the reduction in expected turnover will be managed by a reduction in services and networks. — The Special Grant which accounted for approximately 0.25% of funding for concessionary travel has been abolished and rolled into Formula Grant (the amount transferred will be reduced by £20m from 2012/13). Councils will be required to fund the concession through their general revenue account which is partly supported through the un-hypothecated Formula Grant. Formula grant has been cut by 17% in 2011–12. The vast majority of Concessionary Travel Authorities will receive reductions in funding. It is not possible to calculate a figure for future concessionary fares funding; since this expenditure is required by law and is demand-led, councils will seek to reduce its future cost as far as they can, since the alternative is to make deeper cuts in other services. — Rural Bus Grant, which was £60 million in 2010–11, has also been abolished and included in the baseline for Formula Grant. The services it previously financed will in future be funded from councils’ general budgets which are affected by the 28% reductions to Formula Grant set out in the Local Government Finance Settlement. 64 The bus industry argues that concessionary fares funding is commercial payment for a service rather than public subsidy; given the statutory regulated nature of the scheme, and the fact that the taxpayer’s commitment is demand-led, with no control over the fare that is paid, this argument is hard to sustain. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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— The cuts to Formula Grant, and the likelihood that many authorities will wish to limit future increases in Council Tax, will reduce local authorities’ ability to support non-commercial bus services. — The Integrated Transport Block funding will be cut by approximately £150 million, or over 30% of the 2010–11 figure, in each of the first three years of the spending review period. This will impact on local authorities’ ability to support investment in measures such as bus priority schemes, interchanges and real time information. — Councils will be required to submit bids to access funding from the Sustainable Local Transport Fund which could be used to support bus schemes. — Revised reimbursement guidance for the statutory national concessionary travel scheme will help councils contain the historic inflation in the cost of the scheme. Of course, operators warn that if they receive less funding for concessionary fares, the commercial network will reduce. In addition to these spending cuts, wider economic factors, such as employment levels, will impact on bus patronage and therefore on the viability of that small element of the bus network which is run on a genuinely commercial footing. World market conditions, including the high price of oil will also compound the impact of spending cuts.

Impact of the Spending Cuts without System Change The bus industry is extraordinarily heavily subsidised and may even be the most heavily subsidised industry outside the public sector. Total public subsidy to the bus industry in Great Britain was £2.9 billion in 2008–09, which accounts for about 60% of total turnover of the bus industry (estimated at £4.7 billion in 2008–09). Here are some comparisons of level of public subsidy to UK industries in 2008–09: Industry % of turnover received in subsidy Network Rail 53 Royal Mail 17 Train Operating Companies 4 Buses 60

Source: — 2008–09 data for Network Rail Annual Report and Results 2008–09 www.networkrail.co.uk/ — Royal Mail Report and Accounts Year ended 29 March 2009, page 45. — ftp://ftp.royalmail.com/Downloads/public/ctf/rmg/200809RM_Group_Accounts_May_ 2009.pdf — National Rail Trends 2008–09 Yearbook Page 56 http://www.rail-reg.gov.uk/upload/pdf/ — YEARBOOK0809-v22.pdf and Quarterly update: Rolling stock and investment up to and including Q3 2009- 10, Page 15, http://www.rail-reg.gov.uk/upload/pdf/rolling-c6-misc- 180310.pdf — Bus Industry Performance, Dec 2009 TAS Publications. Given the industry’s reliance on support from the tax payer, significant reductions in public funding are likely to have a seriously negative effect on bus services unless the cuts are accompanied by system change that allows the industry’s public sector customer to specify more precisely what it is buying. Precisely because the current subsidy system does not, for the most part, specify what services or fare levels the taxpayer is buying from the bus operators, it is impossible to make an assessment in advance of the impact of the spending review on services to passengers. The uncertainties include: — the cost of concessionary fares depends on the local schemes councils are currently negotiating with operators; — councils’ ability and willingness to fund supported services and infrastructure improvements will depend on the budgets they set following the Local Government Finance Settlement, published on 13 December; — operators will also seek to replace lost BSOG revenue by asking councils to increase their discretionary support for local services; and — the actual impact of funding changes for passengers will emerge gradually, as operators make decisions about reducing services and route coverage during the year in response to the commercial pressures they face. However, initial feedback confirms that reductions in funding for concessionary fares and BSOG will have a negative impact on commercial services. Operators, particularly those in rural areas, are indicating that they will shrink networks by reducing services and deregistering less profitable routes. This will mean increased pressure on local authorities to support these services at a time when there is less money available for them to cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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do so. The cuts are also likely to increase the cost of supported services as operators seek to negotiate higher prices for socially necessary services contracted by the local authority to make up for the reduction in BSOG.

BSOG The 20% cut to BSOG is equivalent to 6% of operator turnover and the major operators have indicated that they expect bus fares to rise by up to 2% as a result of the cuts. It is likely that the cuts will also result in a reduction of commercial services and networks as operators prioritise services on the most proﬁtable routes and marginal services cease to be commercially viable.

Community Transport Community Transport is likely to be disproportionately affected by subsidy reductions as historically they have operated with higher levels of subsidy than conventional bus services. Rural areas in particular, could face the cumulative impacts of both cuts to conventional services and potential loss of community transport. At the same time, demand for community Transport solutions is likely to increase as the commercial network decreases and it could offer value for money solution. A report from the Commission for Integrated Transport in 2008 found that taxis and other non-conventional, demand responsive services could improve the availability and quality of public transport services for the general public in rural areas, whilst still achieving value for money.65 However, for the reasons discussed elsewhere in this response, Local Authorities’ ability to support more community transport will be limited by pressures on budgets and without system change, they will have no ability to target other forms of subsidy to community transport.

Local Authority supported services Local Transport Authorities will need to take decisions about how to support local networks with less public funding in consideration of local needs and priorities. The decisions will be different in different areas depending on whether an area is rural or urban, has a dense bus network and local journey patterns. However the focus of local authority support is likely to be on maintaining a core network of bus services to compliment the commercial network, and supporting more demand responsive services in rural areas. It is likely that measures taken could include: — Reducing or stopping funding Sunday and/or evening services (NB many rural areas do not have this option as there are no Sunday and evening services). — Reducing or stopping funding services where there is an alternate public transport option in place. — Reducing some daily services to certain days of the week to reﬂect market days of other local circumstances that inﬂuence usage patterns. — Reducing or stopping funding services inter peak (say between 10am and 3pm) which would impact heavily on concessionary passengers who are main users at that time of day. — Concentrating our support for transport that can provide feeder journeys into the commercially provided network. — Concentrating support on transport that can be pre-booked up to 24 hours in advance in rural areas.

Concessionary Travel The spending review identified “significant savings” would be made from the statutory national concessionary fares scheme. As funding for the national concession will now be included in the un- hypothecated Formula Grant, it is meaningless to seek to identify a figure for the cut to funding. However, our initial analysis shows that the vast majority of Concessionary Travel Authorities will receive less funding for the scheme, in some areas significantly less. The LGA has always challenged the assumptions on which this level of savings can be delivered, particularly in the light of LGA on projections of expenditure on concessionary travel in England from 2008–09 to 2013–14 suggests that reimbursement costs could increase by 20% in real terms over this period.66 In December, DfT published revised guidance to Local Authorities on the reimbursement of operators with the aim of ensuring that operators are left “no better or no worse off” for carrying concessionary passengers. It is not yet clear whether the revised guidance will result in lower payments to operators. Concessionary Travel Authorities (CTAs) are currently in the process of negotiating their statutory concessionary travel schemes with operators based on the revised reimbursement guidance. Initial feedback from authorities suggests that the revised guidance will result in lower payments to operators for carrying concessionary passengers, though still exceeding the funding councils receive. However, it is likely that in the face of reduced reimbursement, operators will seek to test the fairness of the new guidance through the appeals 65 CFIT, 2008, A New Approach to Rural Public Transport http://cfit.independent.gov.uk/pubs/2008/rpt/report/index.htm#exec 66 This is based upon demographic change plus a 3% increase per year in commercial fares and a 1.5% increase per in operating costs). This seems likely to be the most realistic of the scenarios that we have examined, given historic experience. (This assumes that there is no underlying trend in the volume of concessionary passenger journeys relative to the estimated 2008–9 level.) cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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system. In the past a number of appeals have found in operators favour and resulted in the local authorities being required to increase payments to operators. It may be some time, therefore before the effectiveness of the new guidance in terms of reducing the cost of concessionary fares schemes is known. Because CTAs are receiving less funding for concessionary travel, if reimbursement to operators does not reduce as a result of the revised guidance, a number of councils will face significant shortfalls in funding for the statutory scheme. This is likely to reduce funding available for public transport, including supported services, which will lead to a reduction in services. On the other hand, if operators receive less funding for concessionary fares as a result of the new reimbursement guidance, the commercial network will reduce, particularly in rural areas where services tend to carry a higher proportion of concessionary passengers and there is little opportunity to generate income from other fare payers. In addition, the cost of councils’ supported networks will increase as operators seek to compensate for loss of income from concessionary passengers by increasing the price for running supported services. The LGA will work with our members to disseminate best practice in negotiating value for money deals with operators whilst minimising impact on bus services, however, without reform of the system, they will have little influence over operators’ reactions. As a result of shortfalls in funding for the national concession, it is unlikely that councils will be able to continue to fund additional discretionary concessions at local level, such as extension to off-peak hours, travel tokens, etc. These schemes are highly valued locally and will mean a reduction in service for those who currently benefit from them.

LGA model for reform—Getting better value for bus subsidy The LGA has developed proposals for reform of the bus subsidy system that could mitigate the spending cuts by ensuring that public funding was better targeted, eliminate waste and deliver savings. They would correct the flaw in the existing system by which the public purse funds two-thirds of the bus industry’s turnover but has virtually no influence over the service to passengers and voters that it is buying with that money. The proposals are set out in detail in our report “The Future of Bus Subsidy” which is enclosed with this submission. In summary, the proposals would replace the existing package of support for bus subsidies with a single stream of public funding for bus services under control of Local Transport Authorities (LTAs). LTAs would be empowered to use the funding to commission specific services and outcomes from operators. This would represent better value for money and result in better outcomes in terms of improved bus services because: — the budget for bus subsidy could be cash-limited and determined by policy decisions and considerations of affordability, rather than demand-driven and increasingly unaffordable; — services that are genuinely commercial would not receive subsidy; — local authorities could specify subsidised route coverage in order to support local economic, social and environmental objectives; and — local authorities could integrate school/hospital/social care with mainstream public transport better and get more purchasing efficiencies.

How would the single pot work? Bus subsidy currently paid by central government would be aggregated into a single budget which could be cash limited. That budget would be delegated to LTAs who would let contracts to bus operators for speciﬁed services or bundles of services through an open tendering process. The LTA would be able to set output speciﬁcations for routes, frequencies, fares and vehicle standards. Central government would be able to specify that the contract should include an agreement to provide the statutory concessionary fares scheme, but negotiation of this cost would be a matter for the LTA and operator to negotiate as part of the contract.

What is needed to make it happen? A full commissioning role may require primary legislation and will require state aid clearance, but these are procedural obstacles. The decision should be made on policy grounds, rather than technical or procedural issues. We understand that Ministers intend to wait for the outcome of the Competition Commission Enquiry into the bus industry before taking decisions about the way public funding for the industry is structured. However, given the timescale of spending cuts, we do not believe it is sensible to wait that long for reform and would urge devolution of the subsidy to coincide with the budget reductions. There is no connection between devolution and the competition issues that requires the government to wait. Even without full commissioning powers, there is a case for devolution of bus subsides to local areas now. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Using current powers, councils could use devolved subsidy to: — support services that are not commercially viable without subsidy through their tendered services budgets; — invest in priority measures, shelters and stops, real time information (RTI) and smartcards to develop a more attractive network for operators and passengers to create a virtuous circle that would make more routes commercially viable, attracting operators and reducing the size of the tendered network again; and — integrate school/hospital/social care with mainstream public transport better. Investments could be delivered through voluntary partnership agreements, with operators agreeing minimum standards, services or products (such as integrated ticketing schemes) as part of the agreement.

Community engagement in planning networks and the role of Passenger Focus Passenger Focus recently wrote to all Local Transport Authorities to encourage them to consult with the public and operators on any changes that may be required in terms of network planning. Feedback from authorities demonstrates that many already have such arrangements in place and that this engagement needs to take place as part of the wider conversation with communities about the impact of spending cuts. Passenger Focus cost DfT £7.4 million in 2009–10 with £1.73 million spent on bus passenger representation and bus mystery traveller surveys.67 That money would be better spent saving bus services for passengers than duplicating local consultative processes. As democratically elected bodies with close links to their communities, Local Transport Authorities are best placed to decide how best to consult and engage people in planning bus networks alongside the design and changes to other services. For example, in Norfolk, the council is already midway through their biggest ever consultation process to help deliver the £155m savings they need over the next three years. “Norfolk’s Big Conversation” is aimed at all residents and businesses, asking for views on a number of proposals affecting services and activities. A comprehensive programme of events has been developed to inform and prompt debate including targeted sessions for special interest groups eg disabled people, older people, young people, carers, black and minority ethnic groups, businesses. The debate, questions and views will inform elected members budget decisions. January 2011

Supplementary written evidence from the Local Government Association (LGA) (BUS 47a) Local Authorities have a long history of supporting and promoting community transport and are best placed to decide how this is done locally according to communities’ needs and circumstances. A uniform model will not work everywhere because community transport is inherently local. Many already do have nominated ofﬁcers with responsibilities for community transport, in other places it is integrated within the transport team or other council functions which can improve joining up with other community initiatives and services. It would certainly not be appropriate nor effective and entirely contrary to government’s commitment to reduce prescription around local delivery for such responsibilities or roles to be dictated from the centre. May 2011

Written evidence from the Association of Transport Co-ordinating Officers (ATCO) (BUS 48) Introduction 1. The Association of Transport Co-ordinating Officers (ATCO) represents officers in county, unitary and metropolitan authorities across the UK. Our members deal with policies for, and the promotion and procurement of, public transport services and the co-ordination of all modes of public passenger travel, including concessionary travel, within the context of the wider transport agenda. We are pleased to offer our views on the above consultation. 2. The following views have been assembled by the Association’s Bus Executive whose members have sought views from colleagues in the region that each represents. 3. In terms of the Association’s working practice, this response therefore represents ATCO’s formal position.

Background 4. ATCO understands that whilst reductions in local government spending are inevitable in the current economic crisis the Association is concerned that the Comprehensive spending Review will have an extremely negative impact on local bus services. This impact will be especially harsh in rural areas where many services 67 Passenger Focus Annual Report and Accounts 2009–10. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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are operated on a marginal basis and where subsidy by local government is necessary even to maintain a bare skeletal network. 5. Many authorities have now established integrated transport groups and units which serve to coordinate the various strands of local authority transport. Past arguments concerning local authorities placing themselves in a poor position through lack of guile and administrative skill can no longer be levied and work sponsored by DfT through its excellence programme has helped to inform this process. 6. Cuts in bus services generally, but in rural areas in particular, can lead to isolation and ultimately in the failure in the ability to sustain rural communities as a whole. ATCO are aware of the government plans for localism and how this can be used to maintain essential services, however, the scale of the cuts envisaged here will largely be beyond the scope of communities to respond. 7. The Comprehensive Spending Review has many facets and the reductions in local government spending has coincided with reductions in other funding to local bus services notably reductions in payments for concessionary fares and increase operational costs.

Bus Services Operator Grants (BSOG) 8. Government plans for a 20% reduction in BSOG planned from April 2012 will increase costs by 1.5–2%, or will result in a reduction of commercial services by a similar amount. In isolation one can envisage operators trying to minimise the effects of this; taken with other reductions in grants and higher costs ATCO believes that the effect of this reduction in BSOG is unlikely to be contained and that it will result in a direct reduction in services, rather than being passed on as a fare increase. Due to elasticity of demand, fares would have to rise by perhaps 5% to compensate. Fares in rural areas are already higher than those of more urban routes and further increases are likely to stifle or reduce changes in travel behaviour with a consequential knock-on negative effect on environmental standards. The 20% increase in BSOG on community transport would be similar, but as the sector may be reluctant to reduce their services or significantly raise fares due to their community ethos, it is most likely to result in greater difficulties and greater financial pressures, in direct contrast to the plans set out by government for localism.

Concessionary Travel 9. Government proposals to reduce operator reimbursement for the English National Concessionary Travel Scheme (ENCTS) from 2011–12 will have a major effect on operator income and therefore net costs. In rural areas concessionary revenue can equate to signiﬁcantly more than 25% of all bus revenue. Reductions in income of these levels would have a severe negative effect on operators’ ability to continue to operate commercial services at current service levels, and supported contracted services at the current tendered rates. This would lead to further service reductions with the inability of local government to adequately respond to meet requirements of social need, given the post-CSR reduced budgets. 10. The DCLG formula-based approach has exacerbated the problem; it would have been sensible to transfer the known scheme costs from Districts to Counties. There is also a link between declining ENCTS operator reimbursement (and reduced proﬁtability) and therefore reduced bus service levels; it may be more cost- effective to retain current reimbursement levels to avoid further commercial service withdrawals and further pressure on bus support budgets.

Passenger Transport Inflation 11. Passenger transport inflation continues to run at a higher level than Retail Price Index (RPI) inflation. Comparisons of increases in bus fares with RPI over recent years are therefore not entirely helpful. Recent increases include rises in insurance costs, staff costs (resulting from legislational change), new vehicle costs (meeting the requirements of legislational change on access for the disabled and emissions) and higher fuel costs.

Alternative Provision 12. Community and demand responsive Transport is seen by many as the potential saviour of local services, especially in rural areas. Those who have used these forms of transport for many years realise that they are an important form of local provision but are very expensive to operate and can generally provide little hope as the safety net for mainstream bus service withdrawals.

Local Authority Spending Limitations 13. The statutory priority of local authority spending on local transport is relatively low compared to other services such as Social Care where recent high proﬁle court cases mitigate against cutting these services. It’s not just that local authorities have some very difﬁcult decisions to take, it’s that the decisions they are having to take, due to other statutory responsibilities, are in effect made for them by the framework of statutory responsibilities set by central government for other services; transport in this context is not statutory—and therefore with reduced budgets is a lower spending priority. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Consultation 14. The lengthy notice period required for contracts and to meet statutory requirements of the bus registration system mean that it is virtually impossible to understand the implications of government spending decisions including the transfer of responsibilities and functions, and the likely budgetary impact within the timescales to meet those of the ﬁnancial year. As a result budgetary cuts in 2011 will have to be larger to off-set the time period lost at the start of the ﬁnancial year. Subsequently meaningful consultation, whilst desirable, is impossible to make without further damage to service provision. January 2011

Further written evidence from the Association of Transport Co-ordinating Ofﬁcers (ATCO) (BUS 48a) What is the national picture of the emerging situation for supported bus services in the light of the Spending Review? Headline results from the ATCO snapshot survey of English councils, February 2011

Planned cuts in 2011/12

100% 80% 60% Shires % Unitaries 40% PTE 20% 0% <25% 26-49% >50% Volume of spend (supported bus services)

In 2011–12, 65% of Shire Counties will cut their budgets by 25% or less, another 30% of Shires will cut by up to 50% and 5% of Shires will spend more than 50% less compared with the current ﬁnancial year.

Estimated cuts in 2012/13 100% 80% 60% Shires % Unitaries 40% PTE 20% 0% <25% 26-49% >50% Volume of spend (supported bus services)

This trend continues in 2012–13, although the percentage of the budget increases as the overall investment in supported services declines as a proportion of councils spending.

Local authorities were asked about their strategies to deliver reductions. These are typical responses received: — Levels of patronage based on cost per passenger, but also re-designing services using DRT/feeder services to protect core daytime network. — Mixture of cost per passenger and main purpose of service—with leisure services having the lowest priority for funding and a service which is the sole or major provider of access to employment, shopping, health or training opportunities having the highest priority for funding. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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— Net subsidy per passenger. — Total withdrawal of all subsidised routes over four years. — Service reduction based on principle of, where possible, avoiding complete route withdrawals, seeking instead to reduce frequencies and choice of travel times. Also targeting for withdrawal services which cater for non-entitled school travellers. — There are service reductions being brought about by concessionary fares but also daytime frequency reductions on local routes. A further route will be reduced from all day Monday to Friday to morning, evening and one lunchtime journey. — Services which no longer meet the criteria, where reasonable alternatives exist and then in order of cost on the day of the week—so most expensive Sunday contracts ﬁrst, then evenings and Saturdays. — Revenue to cost ratio ie contracts are required to meet 40% of their costs through revenue. Proposed withdrawals are for services that fall below this. — 2011–12 fares increase and withdrawal of out of policy services, Further cuts following review of bus subsidy. — Currently based on a £ per passenger/passengers per bus hour strategy. — Focussing on services which are lower priority and high cost/passenger. In practice Sunday evenings, some low use/high cost journeys or services, and services which provide a wider choice of destination (eg shoppers buses to not the nearest town), thinning out secondary strategic routes and rural networks where they are relatively poorly used and/or where would not leave an area with less than a daily weekday service. Could undermine the daytime service viability. — Across the board reductions, typically Sundays, evenings, rural routes. — Weekends and evenings make up a large proportion along with reduced frequencies but also include services to academy schools.

ATCO asked what councils anticipate the operators’ response will be to both Comprehensive Spending Review and Concessionary Fares reductions. Councils said: — We anticipate some withdrawals of services, contract and fare increases. — Higher fares, higher tender prices, reduced frequencies on commercial services and commercial deregistration. — A combination of withdrawal of poorest performing commercial services, higher tender prices and handing in of some contracts. — Services/part of service analyzed on basis of subsidy cost per passenger trip with differing maximum thresholds for categories of service—daily, less than daily, last remaining weekly link, leisure, evenings and Sundays. Differential thresholds afford some protection to less than daily (typically rural) services. — Operator response to CSR—hope to work with us and retain as many services as possible but nothing is set in stone. — We are not currently expecting a huge response from operators. If we had used the reimbursement calculator as initially provided, before additional data was submitted from the bus companies, we could have seen some significant off peak and supported journey reductions. — We believe that CSR will not have a direct effect on the main commercial operators as they operate very few of the tendered services which are likely to be withdrawn. CF (and BSOG) is likely to lead to increased commercial fares first and service rationalisations second. In respect of other operators, we do anticipate having existing tenders handed back throughout the course of the year, but have no specific knowledge as yet of the scale. — Concessionary fare reductions have been agreed with operators and CSR reductions causing some concern. — Already started with significant service cuts. — No significant concerns for 2011. Our major operator has already cut a number of evening and Sunday journeys in the city over the past year or two. These cuts have largely not been picked up by the Council (with a couple of exceptions). The proposed BSOG reductions in 2012 could well result in marginally commercial services no longer being viable. With the Council not being a position to bear the resulting cost, it could be a difficult year with cuts in bus services anticipated cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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— Concerned that some of supported service reductions may undermine viability of commercial services (eg where are withdrawing support for higher level of service on an otherwise commercial route). Have assumed that will need to find estimated £500,000 to replace commercial withdrawals and fund increased contract costs resulting from reduction in BSOG from 2012—this is included in the derivation of the savings targets. Aim of CF “fixed pot” negotiations is to avoid major service withdrawals and uncertainties that all our operators have made it clear would result from application of the new DfT calculator. We have been advised by our CF consultant that to use the calculator without significant amendment to reflect local circumstances would not achieve “no better no worse”. — We are optimistic that part of the currently non-commercial network will be taken on commercially from September. The ongoing local significant shortfall in concessionary fares funding is of huge concern to the Council and in turn to the principal operator. — Fairly significant reductions in commercial services. — Increased deregistration of commercial services. There is no evidence (yet) of increasing tender prices. — Fares increase already announced in this patch. Network of major operator is shrinking, deregistration account for around a 10% reduction in their total network.

Concessionary fares are a key factor in the budget situation facing each council. ATCO wanted to know what the typical position was, and whether councils were managing to reduce the costs of the scheme, in line with the Government’s aspiration: — The results suggest that the reductions in reimbursement are not meeting the reduction targets of around 15%, suggested by Government. In some instances, councils said networks were already reducing as a result of commercial deregistration and the use of the DfT calculator was patchy. February 2011

Written evidence from Professor Peter White (BUS 52) 1. The following evidence is submitted based on extensive experience of research into the role of the local bus industry in Britain over many years, and applying this to current changes affecting the industry. All opinions expressed should be regarded as my personal views, and not those of the University of Westminster or any other organisation. A supplementary note on statistical and ﬁnancial data will be provided shortly.

Features of the Market for Local Bus Travel 2. In contrast to the railways, for example, the bus industry fulﬁls a distinctive role. The average length of journey is short (about 8 km) and demand is not dominated by the journey to work as might be imagined. Indeed, the most common journey purpose (as revealed by the National Travel Survey, NTS) is shopping, comprising about 30% of all trips. This is followed by journeys to/from work (about 20%), leisure (about 20%) and education (about 17%). A substantial element of personal business travel also found. The effect is that a better spread of demand by time of day is observed than for rail, with relatively high levels between the two traditional “peaks”. Indeed, much of the extent to which peak demand exceeds the typical daytime level is associated with school travel, rather than the adult journey to work. The consequence is that many operators run a similar level of service between about 0800 and 1800 on Mondays to Fridays, apart from some peak extra journeys mainly to cater for school travel. However, lower levels of service are typically offered during evenings and Sundays. Saturday daytime service levels are similar to those for Mondays to Fridays between the peaks. Another contrast with rail is that bus users tend to come from somewhat lower income groups. Bus demand is substantially more sensitive to car ownership than is rail. NTS data indicate substantially lower trip rates per person in households owning cars than those in non-car-owning households.

Trends in Use and Factors affecting Demand 3. The broad long-term trend in bus use was until relatively recently one of decline, principally due to rising car ownership. As this rose, potentially fewer bus trips were made. The resultant loss of ridership was then reﬂected in fare increases and/or service cuts, which in turn caused a further drop in ridership. However, a much more positive outcome has been evident in recent years, notably in London, where bus use has grown by about 60% since 2000 from an already high level per head of population. A broadly stable level of bus use in the rest of Britain has also been observed, with substantial growth in certain areas where external factors (such as the local authority role in parking policy) and a positive management approach within the industry itself are evident, for example, in Brighton & Hove. 4. Another feature of demand for bus services is that demand sensitivity to changes in price and service level is relatively low, at any in the short run (a period of up to about one year). This is expressed through the “elasticity of demand”, which may be expressed in a simple form as the ratio of change in demand (in this cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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case, bus passenger trips) to that in some factor causing change. For example, if fares rose by 10% and passenger trips fell by 4%, the elasticity is then equal to: −4 (percentage change in trips) = −0.4 +10 (percentage change in fares) The value has a negative sign, as an increase in fare causes a reduction in trips. 5. We can also measure effects of changes in the service level in the same way. A common method is to use the readily-available statistic of bus-kilometres run. For example, if on a fixed route operating for a certain period of the day the service was increased to run three times an hour instead of two times an hour, then bus- kilometres run would rise by 50%. In this case a similar elasticity is found, but with a positive sign (ie +0.4), since an increase in service level will cause a growth in demand (for example, as a result of reduced roadside waiting time, or greater convenience). 6. Extensive research, summarised in the report “The Demand for Public Transport: A Practical Guide” (TRL593) confirms that these values are typical of the short-run outcome in Britain and similar countries. 7. A consequence of these elasticity values is that a fare increase will, despite causing some loss of trips, produce a net growth in revenue. For example, if a bus service carries 100 passengers per hour at a fare of £1 each, revenue produced is £100. Increasing the fare by 10%, to £1.10, would cause demand to fall by 4%, ie to 96 trips per hour. However, the new revenue per hour becomes 96 x £1.10, ie £105.60, a growth of 5.6%. Hence, the operator is still better off despite some loss of trips made. 8. The same applies to changes in service level. For example, increasing the service offered by 10% would only result in a growth in trips of 4%. If the additional bus-kilometres had the same average cost as those already operated, total cost would rise by 10%, and hence a loss would be made. The outcome is that an operator can offset a loss of trips due to some external factor (such as rising car ownership, or effects of the recession) by a combination of fare increases and service cuts such that financial viability is maintained, even after allowing for a further loss of ridership that occurs. 9. It also follows that ridership can be increased by raising service levels, and/or reducing fares, but that additional financial support may be needed in such cases—this is an element in the strong growth in London in recent years (discussed further below). 10. A further consequence of the low short-run price elasticity is that an operator can increase price levels to improve financial performance, even with a loss of ridership. In theory, excessive price rises (for example, to give profits above “normal” levels) can be deterred by competition in the deregulated regions outside London. However, such competition appears to have limited effects in practice (albeit some exceptions are found).

Factors Affecting Costs 11. Although it is convenient to present unit costs of bus operation in terms of an average cost per bus- kilometre (see below) it is important to bear in mind that about 60% or more of costs are those of employing staff. These are paid on a basis of time, not distance as such. Some other costs, such as the capital cost of vehicles—reflected as an annual depreciation charge, or a leasing charge—likewise vary by time. Indeed, fuel costs are the one substantial element which varies directly with distance, corresponding to about 10% of total costs at current levels (after the effects of BSOG). 12. In many respects, the best way of reducing bus costs is to raise speeds, since the same vehicle and driver time can be used to produce more bus-kilometres (or alternatively the same level of service can be provided with fewer drivers and crews). These may come about through reduction in dwell times at stops (notably through fare collection methods avoiding cash transactions) and speeding up between bus stops, notably by provision of bus priorities and/or measures to reduce traffic congestion in general such as the congestion charging in central London. 13. Costs also vary by vehicle size, so that for example a 20-seat minibus will have substantially lower costs than an 80-seater double-decker. However, while some elements clearly vary in this way (vehicle capital costs, fuel consumption, etc.) the extent to which driver costs vary depends on whether an agreement exists to pay wage rates which differ by vehicle size. It is also the case that while total costs per kilometre of running smaller vehicles are lower, unit cost per seat-km is usually higher. 14. Until the mid 1980s, real cost per bus-kilometre tended to rise, as wage levels increased (in many cases, needed simply to attract sufficient staff as wages and working conditions in other industries improved). Lower speeds due to traffic congestion, and increased boarding time at stops (following conversion to one-person operation while retaining cash fares) aggravated these effects. 15. A striking feature from the mid-1980s was a sharp reduction in unit operating costs, by about 45% in real terms by 2000, both within London and in the deregulated areas elsewhere. One aspect of this was lower wage rates, as previous national agreements were replaced by local negotiation. Productivity was increased by sharp reductions in engineering and administrative staff. Utilisation of buses and drivers was improved by running more intensive services, improving the “between peaks” frequency at low marginal cost. However, cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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since 2000 real costs have generally increased. For example, DfT statistics show a growth of about 23% in real terms between 2004–05 and 2009–10 outside London (nonetheless costs are still about one third lower in real terms than in the mid 1980s). Further reductions in engineering and administrative staff may be difficult to attain. One obvious element is that wage and working conditions have had to be improved to recruit sufficient staff or the right quality (notably in London), at any rate until the onset of the current recession In some cases, traffic congestion has slowed services down, causing costs to rise for reasons mentioned above. Fuel costs have fluctuated sharply, one effect of BSOG being that price to the bus operator is much more sensitive to world market prices than for fuel taxed at the full rate.

Effects of Changes in BSOG 16. The Bus Service Operators Grant (BSOG) is a rebate to operators of registered local bus services of 80% of the duty that would otherwise be payable on fuel used. The effect is to approximately halve the net cost of fuel to the operator (varying by world market prices). Given that fuel is currently about 10% of total operating costs, abolition of BSOG would increase costs by about 10%. This is of similar magnitude to overall profits made by the industry. By reducing total costs, BSOG enables many services to be worth running commercially, and reduces the total cost of services which are run on contracts (for example to local authorities or Transport for London). 17. It can be argued that BSOG is a relatively crude means of assisting the industry, albeit simple to administer. It is certainly the case that fuel efficiency (kilometres per litre) in bus operations has deteriorated substantially in the last 10–15 years.. However, it does not follow that BSOG is a cause of this outcome (even at lower unit fuel costs, bus operators are unlikely to use fuel wastefully if they can avoid it). Contributory factors include the lower fuel efficiency of buses meeting the stricter environmental standards for pollutants (currently “Euro 5”) than older vehicles of the same size they replaced, and some increases in vehicle weight (for example, as a result of wheelchair ramps being fitted, or air conditioning). The requirement to ensure new vehicles meet Euro 5 standards is compulsory, and thus outside the control of the operator. Hence as fleet renewal takes place (in part to meet other statutory requirements, notably accessibility) some increase in fuel consumption may be inevitable. It should also be borne in mind that the overall average for bus operations in Britain as a whole is in effect a weighted average for the whole industry. As bus-kilometres have grown substantially in London (see below) this will itself influence the weighted average, since operations in London typically involve a higher proportion of larger vehicles (typically double-deckers) and operate under congested conditions. 18. Having said this, BSOG clearly has some limitations. It is paid to any operator, irrespective of whether an existing service is already provided. It can be argued that payments related to volume of passengers carried would represent a more effective use of public expenditure, by incentivising ridership growth—see, for example, reports from the Commission for Integrated Transport (CfIT). Such changes would, however, depend on good quality of data being available—for example, from smartcard systems. There would also be a danger if only “trips” were measured (ie each time a passenger boards a bus). This could be to the disadvantage of rural areas, where passenger densities are lower (but average trip length may well be greater). Some improvements in data quality are desirable before such a shift occurs. 19. The decision of the government to reduce BSOG, but in a phased manner, should enable the industry to adjust to these changed conditions without undue difficulty, although nonetheless some increase in total operating cost is likely to occur, with potential effects on service viability.

Concessionary Fares 20. A notable feature of the bus system in Britain is the relatively generous provision of concessionary travel to certain categories in the population, notably free travel after the morning peak to those aged 60 upward. Elsewhere in Europe, while overall levels in financial support are often more generous, and adult fare levels lower in consequence, completely free travel on this scale is unusual, a more common pattern being to offer a reduced price pass to such categories of user. 21. The present system of nationwide concessionary travel in England can be traced to the introduction of common half-fare minimum entitlement in 2001, followed by free travel within the area of residence from 2006, and nationwide in 2008. It has resulted in substantial growth in bus demand compared with what would otherwise be expected, notably in rural regions. There is evidence—for example, from a case study in the Salisbury area—that a large element of the growth in usage is due to those already aged 60 and over taking up the concessionary pass entitlement for the first time, and making additional bus trips as a result. Such “new” users tend to be more affluent than traditional bus users. As a result, one might question whether social equity objectives are being attained—conversely, there has been a greater effect on car use as a result for attracting such user groups, thus assisting other transport policy objectives. 22. In principle, bus operators are compensated on a “no better off, no worse off” basis, ie the revenue that would have been received had the equivalent category of passengers paid the fares set commercially by the operator can be estimated, and compensation paid accordingly. In addition, some capacity costs may be incurred—for example, on a rural service which normally requires a minibus, a larger vehicle may now be needed. In the past it was generally assumed that such costs were low, using empty capacity outside the peak cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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periods. This, however, may be less true now—for example, given that free travel applies in the afternoon peak, extra capacity may be needed as at such times as a result. 23. The compensation payment depends on the ability to estimate the volume of travel that would have been made had the user category in question been required to pay the normal fare. This is in effect a special case of the elasticity concept described earlier. A particular difficulty arises in respect of estimating what would happen where a fare is charged in place of the free travel now available. Extensive research has been conducted to attempt to determine these effects, and hence the net compensation payable to operators (however, relatively little research has been undertaken on evaluating the benefits to the recipients of the concession, and hence whether such a policy is socially justified). 24. A very large annual compensation payment in the order of £1,000 million per annum for Britain as a whole, is now made in respect of concessionary travel. Current changes in the compensation principles used are likely to reduce this, although operators may be affected adversely as a result, if no corresponding changes in costs can be attained (which are unlikely, since passenger demand is affected by the free travel entitlement, not the level of compensation between public authorities and the operators).

School Travel 25. Concessionary travel is a major example of “mandatory” commitments placed on local authorities, and hence of unavoidable expenditure. The other major case is school travel, for which Local Education Authorities (LEAs, typically county councils or unitaries) are obliged to provide free travel to eligible pupils (broadly speaking, those aged 16 or under living more than 3 miles from the nearest appropriate school, with some variations introduced in recent years). This can be provided by local authorities running their own ﬂeets (relatively rare) or more commonly; contracting in vehicles from bus and coach operators. Such travel can also be provided by local authorities purchasing season tickets on behalf of pupils, for travel on scheduled public services (typically registered local bus routes, but also including rail, for example). As in the case of concessionary travel, this also incurs expenditure in the order of £1,000 million per annum. 26. Scope exists for integrating such school services with the public networks, especially in rural areas, so that the same vehicles carry both school pupils and the general public—this may the only means of providing a journey-to-work service for adults, where demand would not justify a separate operation for this purpose. Even where such direct integration does not occur, vehicles required for school services at peak periods may then become available for operation of services at other times of day—for example, for shopping—at relatively low marginal cost.

The Role of Smart Cards 27. As mentioned earlier, one means of speeding up bus services is to reduce dwell time at stops. A feature of the conversion to one-person-operation (opo) from the early 1970s onward (ie removing the conductor) to reduce operating costs was that ticketing systems with a high proportion of cash fare payment were often retained. This incurs boarding times in the order of six seconds per passenger, compared with about two seconds or less where a pass is displayed or smartcard automatically validated. As well as slowing down average bus speeds, high boarding times per passenger tends to produce more irregularity in service operation, due to total dwell times varying with volumes of passenger boarding. London offers an example where very low boarding times per passenger are observed (especially for the articulated single-deckers with simultaneous boarding through all three doorways, in effect a marginal boarding time of less than one second per passenger). 28. The government is giving encouragement to greater use of smart cards as part of its reform of BSOG. An irony at present is that nationwide passes for the English concessionary fare system have generally been issued as smartcards, but in many cases lack of necessary equipment on-vehicle for validating such cards (or “back office” facilities for analysing data) means they do not function as such. Hence, the potential benefits of stricter validation of card use, and data collection to estimate usage more accurately, have not been attained. A further benefit of smartcard systems is that, as well as enabling data to be obtained on travelcard and concessionary pass use, they also enable new products such stored value ticketing (“Pay as You Go” in London) to be introduced, making cashless travel attractive to the less frequent users. 29. It must be stressed, however, that such boarding time benefits only come about where the cash transaction and issue of a paper ticket has been eliminated. This is relatively easy in a system such as London where a common fare applies over the whole network. It is much more difficult in networks where complex graduated fares are still found, and in some cases paper tickets are still issued even for free concessionary travel, in order to provide a record of fares otherwise payable (and hence the compensation described above).

Local Authority Expenditure and Tendered Services 30. In addition to the mandatory elements described above, a substantial discretionary element exists, notably in respect of provision of tendered services. In the deregulated areas outside London, about 80% of bus- kilometres are operated “commercially”, ie they are registered by the operator, who also determines fares to be charged. There is no speciﬁc public expenditure contribution to the costs of each individual service thus cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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registered, although their viability is clearly improved by the role of BSOG (see above). Public expenditure is also incurred through compensation to the operator for concessionary travel. 31. The remaining 20% of bus-km is operated with support from local authorities, generally secured through a system of competitive tendering. Such services typically comprise routes or periods of the day/week where low loadings are found (for example, some routes in rural areas, and very often operation of certain parts of the day or week on routes which are otherwise served commercially such as evenings and Sundays). There are also cases where tendered operation occurs at periods when large numbers of “non-statutory” school trips are made (ie those below the distances for which free travel entitlement applies). Although a fare is paid, this often does not cover realistic costs for extra peak capacity. 32. Such tendered operations thus enable provision of a range of services that would otherwise not be available, and benefit in particular low-income users from non-car owning households for whom travel might otherwise not be possible (for example, in rural areas or on Sundays). 33. The current cutbacks in central government grants to local authorities potentially create the threat of serious cuts to such service provision, and already some authorities have indicated cuts in such expenditure, in some cases exceeding the general rate of local authority expenditure reduction. A particular danger exists in local bus operation that, as authorities are required to maintain the mandatory requirement to fund free concessionary travel, the budget for tendered service provision is squeezed still further. This creates the perverse outcome that users have retained the right to free travel, but may no longer have service on which it can be used. I believe that a strong case exists for reviewing the present level of free concessionary provision, both in terms of its overall affordability, and whether within the public transport sector, it would be more sensible to shift some of this expenditure to service support (for example, by reverting to a half-fare entitlement, rather than completely free travel). 34. Much attention has been paid to the development of demand-responsive services in rural areas in recent years. While enabling very low density patterns of demand to be served, it should be noted that these generally incur fairly high public expenditure per passenger trip made, in some cases exceeding the upper limit which authorities set for support to conventional “fixed route” services (yet both ultimately serve the same purpose). It is also noteworthy that some well-run “conventional” bus services in rural areas (ie offering a fixed route schedule) have substantially increased demand in recent years, such as Norfolk Green (in the Kings Lynn area), and Western Greyhound (in Cornwall). Contributory factors include more attractive frequencies, better quality of service, innovative marketing, etc.

The London Case 35. The very strong growth in bus use in London in recent years, especially in comparison to trends in other conurbations, raises the question of whether the regulatory system applying in London should be applied to other areas. In addition to the recent growth, it is also worth bearing in mind that ridership in London remained broadly stable from the mid 1980s to late 1990s, compared with sharp decline in aggregate in the deregulated areas. The fall in bus operating costs (see above) enabled operations to be run with almost zero directly support from public funds by1999–2000 (apart from BSOG and concessionary travel compensation). However, given the nature of the labour market in London some increase in wage rates was probably inevitable simply to sustain operations at that level. Subsequently, following a policy decision by the first elected Mayor of London, expenditure to support bus operations in London has greatly increased, enabling much higher levels of service, lower real fares and other improvements. 36. I have analysed the components of growth in bus use in London since 2000, and find that the most obvious explanatory factors are the increased level of service, and lower real fares. The direct impact of the congestion charge, while causing a substantial shift from car to public transport, only forms a small element of the growth in bus usage. Other factors include: — Some growth in population in London. — A marked expansion in service levels in evenings, Sundays and overnight, providing a much more comprehensive service. — Comprehensive passenger information, not only through real-time systems, but also printed material at stops, etc. — Simplified fares and use of smartcards (Oyster) enabling very low boarding times per passenger, improving service quality. It is also noteworthy that about three quarters of the growth in bus use has occurred outside zone 1, associated with substantial expansion of service levels in outer zones. Another striking feature of the London case in that car ownership per head has changed very little since the mid 1990s, in contrast to strong growth elsewhere. This does not directly produce a growth in bus use as such, but represents the absence of a negative factor found elsewhere. 37. The London experience suggests that while some factors may be unique to London, certain elements could be transferable elsewhere, notably the benefits of comprehensive network planning, off-vehicle ticketing and comprehensive information. The “quality contract” concept introduced in the Transport Act 2000, and made more feasible in the Local Transport Act 2008, could enable such systems to be introduced in other cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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conurbations. A rather fruitless argument has taken place for many years about whether the trends in London are due to policies which could be followed elsewhere, or due to unique local factors (and more recently, high public expenditure levels). It would be very helpful to test the quality contract concept in one or two conurbations outside London, monitoring the outcomes very thoroughly, to see what the outcomes are in practice.

Network Planning 38. Any form of bus network planning, whether undertaken by a public body such as Transport for London, or a commercial bus operator, is in effect seeking to establish the best compromise between individual person trips (defined by origin and destination, timing, etc) and provision of a public transport service (which relies on consolidating demand in order to produce adequate loadings on the services). Evidence such as service level elasticities (described above) enable effects of service changes on demand to be assessed. Clearly, a good set of data on existing demand is needed, for which systems such as smartcards may augment traditional survey methods. 39. Passengers effectively participate in this process by responding to the service changes produced, which can be monitored, both with respect to overall social objectives, and the financial ones of operating commercially-registered services. It may also be appropriate consult users on specific service change proposals, to determine their feasibility in practice (there is, however, the danger that a small number of adversely affected users may be very vocal, while a larger number who might benefit have less impact on this process). 40. The London approach offers an example where a centralised planning system is used. This enables estimates to be made of the likely effects on demand on changes in bus service patterns. These methods in turn incorporate values derived from passenger behaviour to assess the effects of interchange, changes in waiting time, service reliability, etc. This provides a good method of making incremental changes, which are beneficial to users. However, it does have the limitation that more radical changes may not be considered. It also involves a much greater element of formal consultation than in deregulated areas, but this does carry the risk that where new services are proposed in areas not currently bus served, articulate car users may object, possibly delaying introduction of services which maybe very beneficial to bus users (such as elderly people unable to walk longer distances to existing services). 41. In contrast, the planning found in deregulated areas is largely initiated commercially by operators, with little requirement for formal consultation. This enables innovations to be introduced quickly (a notice period of 56 days), but can also produce some instability in the network. User reactions can be assessed through ridership and revenue changes. One problem arising is the relationship between commercial and tendered services. The latter may tend to be a “gap filling” exercise in which links not provided commercially by operators are maintained by local authority support—given the fact that existing commercial services (for example, an evening operation) can be withdrawn with only 56 days’ notice, local authorities may have little scope to evaluate whether such services should be continued. A more comprehensive approach to commercial and tendered services viewed together might provide a more effective network than the present system. 42. In addition to consultation on specific network changes, users can be consulted on their ratings of existing service attributes (as already found through the quarterly survey of bus users’ attitudes), and the relative importance they attach to different aspects of services (such as frequency, reliability, information, etc). Recent market research by Passenger Focus has been very useful in this respect. January 2011

Written evidence from Ray Wilkes (BUS 102) 1. Introduction 1. My name is Raymond Wilkes. My wife, Jacqueline, and I live in Shipley, West Yorkshire, which is near the Yorkshire Dales in North Yorkshire. We are member of Bus Users UK and Co-ordinator of West Yorkshire Campaign for Better Transport. The following are our personal views, inﬂuenced by these organisations and others. 2. I have read some of the other written and verbal evidence and I will try concentrate on different issues to those already raised. 3. We are members of Dalesbus www.dalesbus.org which has a “hands on” record of providing public transport. We are also members of Bradford CHA walking club www.bradfordwalking.org which provides coach and public transport rambles for Bradford walkers. Being in Dalesbus and Bradford CHA gives considerable insight about the bus company’s perspective and we are used to negotiating win-win situations. We are members of a dales-based business network, the Settle Carlisle Enterprise Network (SCENe).

2. The Importance of Local Bus Services 1. We do not drive so we are totally dependent on public transport: buses and trains. As we are both keen hikers who like to get to remote places we are very aware of rural transport problems. We travel extensively cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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throughout the UK mostly to go hiking but also to visit friends (Fort Augustus, York, London) and relatives (Campbeltown).

2. We are also environmentalists and we are concerned about air pollution, loss of built and rural environments to road building, and road casualties. We believe the UK must become much less oil dependent if our economy is going to survive rapidly escalating oil prices and the risk of disruption due to natural and political events. Road casualties soak up 2% of GDP. Air pollution is a major health risk and costs the NHS dear.

3. We think buses are seriously undervalued: twice as many people travel on buses every day as travel by train. Many decision makers do not seem to realise this and act as if buses are just for the rump of non-car owners. About half of all bus users have access to a car. Bus travel supports retail businesses, tourism and travel to work. Bus services directly reduce congestion, air pollution and road casualties. Bus companies are major employers and purchasers. However, air, train and car travellers appear to get much more ofﬁcial support than bus users.

4. Walking is important for physical and mental health, and to access bus stops and rail stations. As keen walkers we do not ﬁnd local authorities very supportive of us. Cars are allowed to block pavements or park in a way that blocks bus stops and bus routes. Cars are too often allowed to be driven dangerously.

5. Everyone can see that if people were allowed to park on railway tracks then the train service would be ruined, but they ﬁnd it harder to understand that severe trafﬁc congestion and irresponsible car parking can degrade what should be popular and well used bus services.

6. Buses, together with leisure walking, are very important for rural economies. Car borne visitors tend to bring their own provisions, but bus borne visitors do not have a car boot with them and will buy more food and drink in the locality. A bus load of visitors will spend upwards of £200 in the countryside. On a walking holiday an individual will spend upwards of £500 per week on fares, food, accommodation etc. However, car users often choose to make several days trips instead of a longer stay or use self catering, bringing all their food and fuel from an urban supermarket.

7. Good rural bus services can increase tourism dramatically without the need to widen roads and expand car parks as has been shown with the “Norfolk Coasthopper”.

8. Years of involvement in transport environment issues have taught us that our issues can be hijacked by bureaucracy. We have seen funds given by the last Labour government for better bus services in towns and countryside used to create jobs for ofﬁcers or wasted on buses which predictably ran empty for years.

9. We do not believe that the interests of bus and train users are best served by creating or supporting quangos, PTEs, ITAs etc. For instance the top three ofﬁcers at W Yorkshire ITA earn a staggering £320k between them! We do not think this is untypical and the high cost of Local Government Ofﬁcers swallows up too much transport funding.

10. It should be noted that Passenger Focus surveys show that most bus users are broadly satisﬁed with their bus services. In West Yorkshire, Metro’s statistics show that they received about 12,200 complaints from 185 million bus trips, which is about one complaint per 7,500 return trips.

11. Legislation is made in the EU and in the UK which seems to have little regard for economic impact or real beneﬁts. We have strict safety hours which are appropriate for motorway express journeys but completely over the top for rural buses or club coach rambles. Why do rural routes need Euro 5 specs which double the fuel consumption? New EU legislation will affect seating on rural routes making routes more expensive to run—what happened to subsidiarity for local services?

12. Railways have a 10 minute margin for lateness, but trafﬁc commissioners have insisted on a 5 minute margin for buses despite buses having little or no control over driving conditions. Of course we want our buses to be low pollution, on time and safe, but we do not need the conditions to be so gold plated we cannot afford to travel or services become uneconomic or disappear!

13. Bus company profits are often criticised. Profits are mostly recycled into the business. High profits are needed for quality buses and quality staff. Dividends, (1.5p in each £1 income) are a service charge on cheap borrowing. You have to buy the buses before you can charge any fares to pay for them!

14. Our larger bus companies are respectable FTSE 250 companies with an excellent record on safety and pollution.

15. In summary: local bus services would therefore seem to be successfully fulﬁlling an important role in allowing people to access facilities (work, shopping, services and tourism) in their local areas. However, they could meet people’s needs more successfully if they had more ofﬁcial support and more bus priority. Deregulation works and the bus industry does not need radical change. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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3. Recent Changes to Funding 1. We deplore the cut in BSOG (fuel duty rebate) and we cannot see any logic in this cut. It is grossly unfair that bus users pay fuel duty when air and train travellers do not pay it. We think on equity grounds BSOG should be 100% of the fuel duty on buses and coaches. 2. A 100% rebate would help marginal and rural bus services. It would make city bus services more competitive with cars and so reduce congestion and pollution. BSOG is easy to administer efficiently. 3. Cuts to council supported services have been very unhelpful. However, there was always a problem with buses funded via councils. In some counties eg in Lincolnshire some good decisions were made, leading to a new and expanded network of commercial services. In many counties resources were spread too thinly, leading to services which could not grow patronage because they were not fit for purpose: (infrequent or too circuitous) or poor operators (missed journeys, bad drivers, no publicity, a lack of belief in rural buses). These services could never survive hard times. Opportunities were missed to create sustainable networks. 4. In addition, local political pressure from users groups or elected councillors sometimes led to poor decisions, despite a sincere commitment by officers. For instance, as the council was paying for the services it was argued that the needs of local people should be prioritised over visitors’ needs, even when prioritising visitors’ needs might have led to a more sustainable network safer from cuts. 5. More than half of the usage of some Yorkshire Dales routes is by visitors, yet it is difficult to ensure connections from West Yorkshire trains are provided. 6. Nevertheless we had a moderately useful network throughout North Yorkshire until the recent government cuts led directly to the loss of evening and Sunday journeys. It was argued that these were less essential than weekday daytime services. The loss of evening journeys affected work journeys (40% of evening journeys according to Peter Shipp, EYMS) and access to education. The loss of evening leisure opportunities, visits to clubs and pubs, has adverse economic effects. In many parts of N Yorkshire, Sunday is the busiest tourism day and visitor and work journeys were not provided for after the cuts. The economic benefits of bus borne visitors were referred to in section 2 paragraph 6. 7. Fortunately the Dales & Bowland Community Interest Company (Dalesbus) stepped in this year for the Yorkshire Dales, and the N York Moors National Park has managed to keep Moorsbus going. However, some people will be left high and dry in getting home from work or college, while some daytime services with relatively little usage will be preserved. The long term future of the Dalesbus network is completely dependent on a successful bid for a government grant. 8. We think that directly helping bus companies by 100% BSOG, proper payment of concessionary fare compensation and wherever possible providing bus priority and demand management will support bus users in a way which is cost effective and avoids bureaucratic inefficiency and poor decision making. 9. However, at the margin there would still be a need for supported services. Where possible a user based Community Interest Company may be the best way forward. The Dales & Bowland Community Interest Company has set high standards and suggests an excellent way of getting value for money and providing a good integrated network.

4. Free Travel for the Elderly and Disabled 1. You will have heard many arguments about this before and I will try to bring out some different issues. 2. My wife and I probably are more than £2000 per year better off due to free travel. We are healthy (cancer survivors, we hope) and live near good bus services and we can afford to travel. However, it is hardly a fair scheme as there are many who can get little beneﬁt. It seems a little odd to us that we have to pay our own fares for early hospital appointments but the government will pay our fares to the pub! 3. However, there are many excellent features about the scheme. Better off pensioners are using their cars less, cutting congestion and air pollution. Less well off pensioners are getting out more and having more of a social life, although some may be walking less (not good for health). The money saved by car owners and bus users will mostly end up in retail spending and this supports jobs and businesses, and hence communities. Retail is the big winner from this scheme. 4. Unfortunately the scheme is poorly administered and underfunded. In some cases, LAs hold back the money for other budgets. The result is that some companies have to cut quite well used services and/or increase fares for paying passengers. 5. It is true that some bus companies in some local authority areas are doing well out of the scheme. Surely it is right that if a company is helping the government to deliver social and economic objectives, then that company should get some economic beneﬁt from doing so? England could learn from the way the Welsh and Scottish schemes are administered. Scottish operators receive more than 66p in the £ as concessionary reimbursement; until last year it was 73.6p, but a lower rate was negotiated. This is applied throughout Scotland and compensation does not vary from one local authority to another. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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6. Before I was 60, if I went to nearby Keighley I would buy a £3.30 K-Day. Now I keep the money which eventually ends up in the retail sector. The bus company gets about £1.50 for the return trip. If I spend the £3.30 at Marks and Spencer’s the government gets back 66p in V.A.T., and if I spend it in Wetherspoons the government gets an extra 75p in duty, £1.41 (V.A.T. + duty) in all. Pensioners, retailers and the Treasury do well out of free concessions, but the bus companies lose out! 7. An analysis of concession spending may show that the treasury could afford to fund the scheme properly if the matter was researched properly. It is immoral and iniquitous not to compensate the bus companies properly and fairly. We do not think that the government would try this on with any other kind of business except bus companies. The choice should be to fund the scheme properly so as to maintain services or to scrap the scheme.

5. Taking into Account Passengers Views 1. Bus companies base their services on existing travel patterns which evolve naturally. They sometimes make revisions based on in-house or consultants’ studies of demographic and business developments in their area. Bus companies also do surveys and use mystery travellers. Sometimes there are good local relationships with local councils which enable better networks to be developed. 2. Buses are used for Shopping (28.2% of trips), Commuting (19.7%), Leisure (19.7%) and education (16.7%). source DfT National Travel Survey 2008. 3. The question is how far bus company decision making can be improved by passengers’ views. A difficulty is that buses are a form of mass transport used by all sections of society (Highest income band 11%, 2nd highest 14%, middle 17%, 2nd lowest income band 26%, lowest 32% Source DfT) and it is the average passenger who has to be catered for in the context of a financially viability. People who live in areas of low population density or who have unusual travel requirements may find buses and trains inconvenient even in areas of excellent public transport. 4. If more passengers use a network there is more money for better services, so getting the quality right and marketing a service properly can lead directly to better services. In this context bodies such as Passenger Focus, Bus Users UK and the Consumers Association can provide very valuable feedback to bus companies. Local Authorities can also be very constructive if they are genuinely trying to knowledgeably represent passengers and are not pursuing a political or uninformed agenda. 5. Local Bus Groups and individuals writing to or speaking to local bus companies can be very helpful in improving services. Most bus company managers try very hard but feedback can effect further improvements. Some companies have found it very useful to work with and support user groups. For example Transdev have formed a Harrogate Bus Users Group. Transdev, First, and Arriva senior management have addressed and listened to West Yorkshire Campaign for Better Transport. 6. Good local groups and astute individuals may provide really valuable feedback to companies. Marketing ideas can be suggested or untapped markets pointed out. 7. Where local management of a big group appears not to be listening, user groups and individuals can escalate any dissatisfaction to head office, usually with beneficial results. 8. It should be recognised that sometimes the wrong sort of activist or politician will achieve nothing or may even harm a bus route or network with unduly negative publicity. Bus company management can usually do more for people if they feel they are amongst friends than if they feel beleaguered by sustained attacks. In a hostile environment managers may try to keep their heads down and avoid meeting people. Cooperation is better than confrontation. 9. People and organisations who believe buses should be cheap do not do bus users any favours. Of course buses have to be affordable to be of any use, but buses are expensive to procure and to run. All motorised transport has environmental impacts and this should be represented in the cost. Buses are primarily a form of mass transport, they are not a solution to poverty or disadvantage, which should be addressed directly. The main way that bus companies can serve the largest number of people, especially the less well off, is to maximise patronage across the full range of income bands, not just by targeting the less well off. The reach of Harrogate and District buses, in terms of geography, and in terms of evening and Sunday services, is much greater than 15 years ago because the management deliberately adopted a strategy of promoting bus use to the “Mondeo man”. 10. Local Bus Groups can press for better bus priority which would usually benefit busy bus routes, but improving the economics of such routes can bring benefits to more marginal routes which may then get improvements instead of cuts. 11. Passenger Focus and Bus Users UK can educate local groups to have realistic and viable expectations. Not everything people want is possible! 12. In summary, passengers’ views can be represented in a variety of useful ways which could be encouraged and supported. The strengths and weaknesses of different kinds of representation should be recognised. Generally effective groups will win respect and prosper and others will fall by the wayside. There is no formulaic way of representing passenger’s views. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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6. An Exceptional Case 1. Dales & Bowland Community Interest Company and The Yorkshire Dales Public Transport Users Group (YDPTUG) have blazed a trail in the provision of rural bus services. 2. Services have been designed to be integrated. Partnerships have been developed with bus companies and local authorities. Publicity has been designed and distributed, much from members own resources. 3. In Nidderdale a door to door leaﬂeting by YDPTUG of an entire 15 mile route has led to a 10% rise in patronage, making a marginal route much more secure. 4. The company and the group deserve political support as they may be a fruitful model for many other areas. 5. My wife and myself were two of the founder members of YDPTUG and served on the committee for a number of years, though not for the last few years. April 2011

Written evidence from Terry Kirby (BUS 103) THE EFFECT OF FUNDING CUTS ON BUS SERVICE PROVISION Firstly, I’d like to introduce myself briefly. I have a strong background in public transport, gained partly as a local authority as a Public Transport Coordinator, and, more recently, as a Travel Plans Coordinator at Leicester College. For nearly 20 years, I have been involved with Transport 2000 and campaign for better transport (Leicestershire), the last 10 years as Chairman. For about the same time, I have been Buses Coordinator for East Midlands Transport Activists’ Roundtable (EMTAR), an alliance of non governmental organisations with an interest in sustainable transport in the region. So I have a broad subject knowledge, directly relevant to this Enquiry. The effects of the changes to funding for bus service provision are being, or will be, felt in three main ways: 1. Reduction in the rate of concessionary fares reimbursement to bus operators. This is having a particularly bad effect in areas with an above average percentage of passholders. One example of this very close geographically to me is Hinckley. Here, in a town where the main urban area has a total population of around 70k. the local bus service network is in a dire state, largely as a result of these cuts. Complete closure has only just been averted after prolonged negotiations between the County Council and the main bus operator, Centrebus, and three public meetings. And, even then, we’ve been told that the agreement only lasts for a fixed period. We are now having to plan for a reduced frequency using fewer vehicles, in the hope that this can secure some sort of future for the network. 2. Another issue is the major reduction in local authority funding for supported bus services. This affects services in all areas, not just rural. A high proportion of evening and Sunday services where the daytime service is commercial have, in the past, been thus supported. The effects of this have included many local authorities (the first being Leicestershire) withdrawing support for all evening and Sunday services. In quite a few cases, work by campaigners with bus operators and the council led to the bus operator taking them on commercially. But many were withdrawn, and I have been made aware of several cases where people have had to give up jobs or further education opportunities as a result. In Northamptonshire, the Council has withdrawn support for all bus services. While the major bus operator, Stagecoach, is doing all it can to provide commercial alternatives, this is still having a disastrous effect on many parts of that county. And these are just two of a number of similar examples. 3. The reduction in Bus Service Operators’ Grant (BSOG) over the next two years is another problem. BSOG is the reimbursement paid to operators of scheduled bus services of part of the fuel duty they incur. It is estimated this will add about 5% to their total running costs. These cuts are already affecting people in many areas. And, with more cuts expected, this situation is likely to get worse over the next few years. The bus is the main form of public transport in the UK. More than 70% of all UK public transport journeys are by bus, and it’s ideal for journeys of less than five miles length, which make up around 80% of journeys currently made in the UK. And, per passenger mile, the bus is responsible for around 30% of the emissions of the average family car. In addition to their effects on vulnerable people, these cuts will also hugely undermine the ability of the bus to compete with the car. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Turning now to how passengers’ views are taken into account when planning changes to bus services, there are some Best Practice examples in the East Midlands, principally through Trent Barton, based near Nottingham, who conduct passenger surveys, etc, and use the data from these in planning changes. They also use various media, including the modern media, to inform passengers of such changes. But, currently, they are the exception to the rule. Very few bus operators do anything like this. In fact, the major operators are usually terrible at it. Arriva, in fact, recently carried out a major service review in North West Leicestershire which included cutting one local village service completely and cutting the late weekday evening and Sunday services with a combined population of over 10k. people. There was no publicity at all until five days before the change, when notices first appeared on buses and a display unit went up, for four hours only, in Coalville Town Centre. There was no leaflet drop at all in the affected villages. First in Leicester are no better, either. They’ve cut quite a few late weekday evening and Sunday evening services with very little advance publicity. Leicestershire County Council say they are planning major changes to their supported service network to take effect from April 2012, against the background of a £500k. per annum cut in bus funding from the current £4.5 million budget. They say they will consult and work with groups like ours, and the wider public, later this year on how best to achieve this. We’ll see what happens. What is really needed to promote use of buses is a properly integrated approach to service planning, with well resourced and managed interchanges between different services. Examples of that are at St. Columb Major in Cornwall, and, much nearer to my home, Oakham and Uppingham in Rutland. I hope you find this useful. April 2011

Written evidence from Victoria Harvey (BUS 104) Summary 1. Bus services are key to reducing congestion, access to skills, vital for the wellbeing for elderly people, support communities and successful services can support economic growth through reducing congestion and also reduce the cost burden on social services and the NHS. Buses can play a major role in reducing congestion in urban areas and thus play a crucial role in economic growth. 2. There have been historic problems with funding for buses due the previous governments insistence on funding capital rather than revenue, which is very crucial for buses. There has also not been sufficient work on Cost benefit analysis for buses unlike cycling which makes it harder to argue within councils for spending to go on buses rather cycling or other needs such a libraries or nurseries. The extremely rigorous analysis of the Sustainable Travel Towns and the lessons from Aylesbury, Glasgow, Stagecoach in Perth and Fife, Cambridge and Brighton should be much more widely applied and used. 3. The Local Sustainable Transport Fund bid (bids of £5 million), although an excellent fund will only partly make up for some of the cuts such as the huge cut in the Local Transport Integrated Block and some authorities are applying for cycling schemes rather than buses. The fund will provide money for marketing which is brilliant but it will not provide the crucial early revenue support for new or improved services or investment in new services and only two thirds of councils applying will be successful. 4. The cuts in overall local authority funding resulting in bus cuts will not be made up for by community transport. Community transport providers needs considerable support to grow their organisations to meet the demand and it can work out as more expensive. 5. The cuts to concessionary fares mean that it many cases it will not be worth while to run buses even though there could be considerable demand from OAPS and if there was better reimbursement then the mixture of non concessionary and concessionary bus fares could create a commercially viable route which would support young people accessing skills and work and provide an attractive alternative to car use, hence reducing congestion. 6. The cuts to BSOG in addition to the historic lack of funding mean that we could be seeing a steady decline in buses, even losing some depots, leading to very serious social exclusion in some areas, and costs to social services and well as increases in congestion stifling local economies. 7. The overall cuts to local authorities and the cuts in Kick start funding which was excellent mean that there is scarcely any opportunity to grow and improve bus services. There are huge costs to social services and to hospitals as the bus services are so limited. Improvements to these bus services could overall significantly reduce costs to the public purse I have provided detailed case studies to show the reality and economic and social cost of these changes in Leighton Buzzard where I use the buses and campaign, sometimes with success for better buses with community groups, local councillors and officers and bus operators. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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8. There are many small barriers and blockages which could easily be removed through ringfenced funding for supporting bus services with a ringfenced marketing (including using marketing expertise) budget. These would not demand huge amounts of ofﬁcer time which is also very expensive and would create a climate of successful deliverability.

1. Introduction I am a bus user who does not own a car and suffers from ME/ Chronic Fatigue Syndrome which means that on occasions I cannot walk more than a couple of hundred yards and thus am completely dependent on a bus stopping near to my home. I occasionally have the opportunity to borrow a car. As Leighton Buzzard a town of 37,000 has no hospital, buses to the Milton Keynes Hospital, or Luton and Dunstable hospital and Stoke Mandeville hospital in Aylesbury take on a critical importance. As a keen supporter of our local high street and market and the community spirit that they create I am very concerned about the economic damage from congestion. As coordinator of the voluntary group South Bedfordshire Friends of the Earth, ( mainly active in Leighton Buzzard but also in Dunstable), chairman of Leighton Buzzard Station Travel Plan (voluntary) and also having been employed on temporary contract to Milton Keynes Council ( as Station Travel Plan Officer), I have worked hard to encourage others to use the bus rather than the car and thus reduce their carbon footprint and congestion. However in many cases in Leighton Buzzard and Milton Keynes the bus services do not provide an alternative to travel by car, especially in the early morning or late evening, or on Sundays. I have also been on the Board of South Bedfordshire Local Strategic Partnership, where the effect of congestion and social exclusion on the overall sustainability and economic prosperity of South Bedfordshire is very obvious. Above all the greatest barrier to bus use is that it can be extremely difficult for local residents to understand what bus options actually exist. Bus timetables are complicated and leave out many of the stops on the route creating a huge mental challenge of commonsense, and intuition to discover where and when the bus departs. To discover these facts with certainty one requires an in-depth knowledge of the intricacies and peculiarities of the Traveline website, and sometimes the exact details of the name of the bus stop and the bus operator as well as access to the internet which many more elderly bus users do not have. This is a particular barrier in Milton Keynes. In frustration at these barriers to bus use, I with other residents and bus users have lobbied and worked hard to improve the local bus services, create new bus services and improve the information, putting up posters and timetables ourselves for free. We have worked closely with operators and council officers and councillors and so have learn what are the real challenges and barriers to improving bus services and also what are the opportunities. Buses are key to solving congestion and economic prosperity, for work, shopping, the school run, helping young people access skills and jobs, helping elderly people stay in their own homes and socialise and access hospitals. They can also improve air quality, which became front page news over the Easter weekend as they can replace short trips by car especially shopping trips and they can preserve the tranquillity of country parks by reducing the amount of cars accessing them. They are a major social contact for many people and bus drivers in some cases play the role of unpaid social workers saving social services huge sums of money. One Leighton Buzzard bus driver was concerned that a regular elderly customer did not appear, so in his own time called on him, discovered that he was ill and did his shopping for him. There are many passengers who have problems with walking and are very frail. One lady near me definitely would have had to go into care if it was cut. There is a Dial a Ride Service for those who are severely disabled but you have to book it two days in advance and as this woman suffers from some memory loss that is very challenging for her. Moreover it removes the independence and freedom of being able to choose on the day if you are well enough to go out, if the weather is good or bad, and to come home earlier if you are feeling weak. Personally suffering from ME/ Chronic Fatigue Syndrome, it could be very difficult during the bad times of the illness to continue to live alone without the bus service. Also if the bus service were cut and everyone who did not have a car had to use Dial a Ride it would end up costing far more than a bus service. The cuts post the comprehensive spending review has to be seen in light of the previous restrictions on funding. It is not these cuts on their own but the culminative effect of these cuts in combination with previous cuts and a long term lack of public funding and understanding of the bus sector, that will be so destructive for the country most of all economically, as well as socially and environmentally.

2. The effectiveness of bus services in cutting congestion and the level of public subsidy in relation to other forms of transport Much has been mentioned in the evidence so far about the role of Buses as regards social inclusion however I am concerned that much less has been said about their crucial role to the economy in reducing congestion especially urban congestion which has a huge economic cost to the country. In my region, The Transport Economic Evidence Study (TEES) published by the East of England Development Agency in 2008 concluded that that the cost of congestion across the six counties of the East of England was £1 billion in 2003 and, unless radical joint action is taken by all partners in the region, that this could double to just over £2 billion cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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by 2021. This is borne out by my local experience. Improvements and small scale revenue funding for buses can and could signiﬁcantly reduce the cost of congestion to the country’s economy.

2.1 The local situation (a) In Leighton Buzzard severe congestion in the town centre on Saturdays means it can take longer to travel one or two miles into the town centre rather than drive 10 miles to the large retail parks and this results in local residents shopping outside the town, increasing carbon emissions and means a huge economic loss to the local businesses who are employ many local people and the whole vitality of the High Street. (b) The school run causes huge congestion and delays in the morning and evening peak. (c) People drive to Hemel Hempstead Station for their rail commute instead of Leighton Buzzard station due to congestion around Leighton Buzzard creating a considerable increase in expense for commuters and a greater carbon footprint for the area. (d) In Dunstable at the Local Strategic Partnership, the business representative and many other partners would on many occasions stress the considerable cost to business of local congestion. In Milton Keynes the big threat to delivery of increased housing is severe congestion unless there is considerable modal shift to buses.

2.2 National Evidence on Congestion reduction through bus use The DfT has detailed evidence from the “Sustainable Travel Towns” on the effect that investing in improved bus services has had in reducing congestion in Peterborough and Worcester . In the inner area of Peterborough, traffic was cut by 7%, car usage was reduced by 9% and bus patronage was increased by 35%. In Worcester, in the central area traffic was cut by 8%, bus patronage increased by 20% and on one artery road into town, bus patronage approximately trebled, with an increase of 663,317 passengers a year and with a reduction by 5% of the traffic on that road; a reduction of a 304,925 vehicles a year. The total spend on all sustainable transport measures including working with schools and increasing cycling etc, both capital and revenue, over five years was £6,803,000 in Peterborough and £4.411,000 in Worcester. Evidence from Stagecoach and from places like Aylesbury show considerable modal shift to buses and reduction in congestion can happen at much lower investment rates.

2.3 National and local evidence on the value for money of public subsidy for buses It was previously raised by this committee that considerable public subsidy was needed for buses. However in comparison with the effectiveness of public subsidy for road building in reducing congestion the value for money of subsidy for buses is considerably greater. Very few roads have maintained any significant reduction in congestion. The Linslade Western Bypass was built in 2005 at a cost of £60 million (with the ongoing cost of maintenance). It significantly reduced traffic in two very small villages, but dramatically increased traffic in the much larger village of Wing. In Leighton-Linslade it switched traffic from one artery road to another artery road that had with two schools on it leading accidents involving children and has done very little to reduce congestion in Leighton-Linslade. A separate one million pounds had to be found from Bedfordshire County Council for a new traffic layout in the town to prevent complete gridlock, and congestion at certain times is still very bad. An independent report in 2008 by Steer Davies Gleave, jointly commissioned by Buckinghamshire County Council and South Bedfordshire Friends of the Earth showed that significant investment in buses as well as cycling rather than a new dual carriageway ( the Wing bypass) linking Aylesbury to Milton Keynes would be significantly cheaper and more effective at reducing congestion, increasing social inclusion and reducing carbon. Indeed the report highlighted the effect that small sums of investment in public transport could have in reducing congestion. “If the sums typically spent servicing the debt of a £150 million road schemes could instead be spent on the long term support of enhanced public transport and on ongoing sustainable transport development (personalised travel planning promotion and marketing activities etc) truly revolutionary enhancements to local public transport networks and substantial travel behavioural changes could result”. Para 6.7 of the A418 Alternatives Study.

2.4 Successes in Leighton Buzzard in reducing congestion through the bus service Dash Direct The Dash Direct bus service run by Arriva and contracted to Arnold White Estates with a steering group that includes Central Bedfordshire, Leighton-Linslade Town Council and South Bedfordshire Friends of the Earth, has been running for a year exactly. The distinctively branded service runs every half hour from a new housing estate that is being built and will eventually contain 1,700 houses in the south of the town through the industrial estate to the town centre and the railway station Monday to Saturday 5.45am to 9.45pm. It takes 12 minutes from the estate to the railway station. It has carried 50,000 passengers in its first year. This means 50,000 car trips removed off the road. There has been a 20% modal shift away from single car use from the predicted levels of traffic with housing growth if it had been business as normal. Some passengers have given up their second car which has helped enormously financially. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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The initial cost for this year has been £280,000, This has included the residential travel plan for the area, with a special website with details of the town, a directory of the shops and services of the town for the new residents, as well as personalised travel planning, three years of monitoring etc. There are dedicated and very friendly bus drivers who play major role in the attractiveness of the bus service. About £40,000 has been recouped through fares. The service steadily grew. The subsidy per passenger was £15.77 in the first week and last week (51st week of running), it was £2.23/passenger. It started with 200 passengers per week and is now carrying about 1,200 passengers per week. This was funded through developer funding and support from DCLG on other aspects of transport so that this money could be freed up and used for the bus service. There was not the revenue funding available from any other source except developer funding for a new bus service. The service is steadily growing, carrying rail commuters, people who work in the town, children to school as well as concessionary fares, shopping trips and leisure trips, and creating a strong community in the new estate. There is considerable local community support for this service. The plan is for the service to increase to 15 minute frequency and to be commercially viable after five years. Marketing and publicity have been key to the success of this project. With increased cuts the local authority will need developer money for many other areas as well as buses and so following the Comprehensive Spending Review it might be difficult to replicate this unless there is considerable community support.

2.5 Success in Milton Keynes through the Platinum Service (300) The large scale new housing development in the Broughton Gate area in the East of Milton Keynes has provided the funding for a partnership between Milton Keynes Council and Arriva to run a 20 minute frequency direct service from the new estate to the shopping centre and the railway station from early morning to late evening. The service is clearly branded. It has just had its second birthday. It has carried about 350,000 people over two years; 5,500 passengers a week which means the removal of 5500 car trips in Milton Keynes a year. Milton Keynes Council is doing a programme of personalised travel planning to all the new residents of the estate to make sure that new residents are aware of the service and are encouraged to try it. Marketing, promotion and branding have been key to the success of this service. Again post the Comprehensive Spending Review the pressures on money from developers to cover many other areas such as community facilities, schools and health etc will be considerable and it might be very hard to gain funding for a bus service as opposed to a children’s nursery or health facility.

3. The impact of 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 of Transport 3.1 Cuts in subsidised services 3.1.1 As part of the overall cuts Central Bedfordshire has cut £400,000 from its subsidised services. In Leighton Buzzard this had a particular effect in the village of Heath and Reach adjacent to and north of Leighton Buzzard and the northern part of Leighton Buzzard itself. The 27 bus service which carried commuters direct to the station from Heath and Reach and northern LB in the mornings and the evenings was identified for cuts as was the no 10 Service which went from Leighton Buzzard through the Heath and Reach and other villages to the Open University and central Milton Keynes. The loss of the no 10 meant that at least 10 people would have severe problems accessing their jobs at the Open University. Sue Kerby of Plantation Road who works at the OU wrote an open letter to Andrew Selous MP stating “Personally I feel that I will be trapped in Leighton Buzzard, no longer being able to make independent journeys to anywhere much—on a Sunday not even to Leighton Buzzard Town Centre—and my journey to work being no longer available. I don’t drive and my husband works shifts so is not always available to ferry me around even at weekends. The station to go by train is as unreachable as Leighton Buzzard Town Centre. As evening travel anywhere is not a possibility even now I may as well forgo a pensioner bus pass it is fast becoming worthless.” 3.1.2 These cuts followed the previous commercial cuts to the 150 service that Arriva ran from Ayelsbury to Leighton Buzzard, Heath and Reach to Milton Keynes which used to go via Bletchley and the hospital. The 150 service still runs to Central Milton Keynes but does not stop by the hospital or in Bletchely. To access the hospital and Bletchely you now need to change bus in Milton Keynes, which can be a highly confusing process as there are many bus stops quite spread out and it is very hard to identify which is the right bus stop as the public transport information in Milton Keynes is minimal. Indeed several reports have highlighted the poor standard of bus information in Milton Keynes. The plan to change bus in MK to access the hospital was not well advertised by Arriva mainly through lack of their own funding for marketing. As a result many residents in Heath and Reach felt cut off from the hospital and from the shopping centre in Bletchley and the new cuts felt like the final straw. 3.1.3 The argument for loosing these services was that the figures of usage were low so it ended up as very large subsidy per passenger. However due to the existing lack of funding for publicity and complicated routes, many people, including those who had no other means of travel but the bus , were unaware of the times of these buses and so did not use them. Due to lack of funding for public transport officers ( revenue funding) there had not been the officer time to ensure that the commuter bus service timetable was actually integrated with the trains. The no 10 bus service was frequently late and frequently followed the wrong route. Again cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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there was not the ofﬁcer time to enforce this and the service was operated to very tight ﬁnancial margins in order to be an affordable tender for Central Bedfordshire. The operator was very keen to be helpful but had a very tight budget. It is a very small team who have to deal with all the bus routes and publicity for the whole of Central Bedfordshire. The bus companies are keen to do as much as they can, but they work to incredibly tight margins.

3.1.4 There was a very powerful campaign from the parish council and the about 10–15 residents who relied on the 27 bus to the station in the mornings, which linked in with the Campaign for Better Transport Campaign of Save the Buses. This resulted in the cuts being featured on national ITV Daybreak news as well as being covered in the local paper. Due to political pressure and the funding for community transport and very proactive and articulate users of the services a solution was found, using the local dial-a-ride service, the Buzzer Bus which now operates as a bus service for the early morning and the evening bus services. This service also now picks up the people who need to access the Open University and linked them to an Arriva service that they could use.

If the residents had not been so articulate I do not think that a solution would have been found.

3.1.5 The Buzzer Bus were excellent and very proactive and the Central Bedfordshire ofﬁcers and councillors and local MP and myself all worked very hard. However, this community transport has ended up being more expensive than the original bus service. Community Transport organisations need so much help and development support and advice and education from ofﬁcers in order to increase their role and size and deliverability. and understand bus marketing etc. They are not able to automatically step in and replace a bus service.

3.1.6 It could have worked out as much cheaper and better value overall if there had been more ring fenced money in the local authority for more ofﬁcer time to work on the timetable, publicity and punctuality of the existing bus service.

3.2 Loss of Kick Start Funding

3.2.1 This has been cut in the Comprehensive Spending Review and has not been replaced. It was very useful in funding improvements to services until the patronage increased to make them financially viable. Bus services need between one and five years supported funding in order to make them financially viable.

3.2.2 The bus services from the East side of Leighton Buzzard ( Hockliffe street area) about 1.5 to 2 miles from the station do not start until 8.00am. This means that commuters using the rail station have to cycle or go by car. Arriva worked closely with Central Bedfordshire Council and Friends of the Earth to put in a Kick Start bid of about £250,000 so that the services could be extended to 6.00am and run until 7.00pm and then be marketed. This process created a close and productive partnership. However the last government delayed granting the fund and then this government has cut it. This Sustainable Local Transport Fund is aimed at marketing and promotion—not providing the subsidy/ kickstart needed to grow the patronage on a route.

3.2.3 The cut to Kick start funding means that for thousands of people who live in the Eastern side of Leighton Buzzard station there is no possibility of accessing the railway station in the early morning by bus. They have no alternative but to drive.

3.2.4 Many residents in the Buckinghamshire villages beside Leighton Buzzard use the station in the early morning. KickStart Funding would allow Arriva to increase its early morning service and with promotion it could create enough patronage to be commercially viable as well as cutting carbon and reducing congestion around the station.

3.3 Cuts in subsidised services leading to larger decline

The cuts in Sunday and evening services in Buckinghamshire put pressure on the tight margins of companies like Arriva meaning that there are serious risks that it will not be ﬁnancially worthwhile to maintain a depot in some towns.

3.4 Cuts affect skills training

The Principal of Central Bedfordshire College used to say that her student applications depended entirely on the bus routes. The cost of travel from Leighton Buzzard to Dunstable to access the college is about £20 a week, too much for many families. There has never been the funding for subsidising travel for students. With the cuts there will be less routes and less hope of any funding.

Milton Keynes has a concessionary pass up to 19 years old. However there is no funding to produce a map with the bus routes and the colleges so that people can see at a glance how easy it is to access skill training. Some training providers have real problem explaining to students how to travel to them, even when there are buses to the training centres. This situation will get worse. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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3.5 Cuts to LTP funding The Integrated Block funding of Central Bedfordshire’s Local Transport Plan has been cut in half. This means that many options like Real Time information at bus stops have become unrealistic Improvements to bus stops, creation of bus stops and bus shelters can no longer happen. The Sustainable Local Transport Fund is welcomed and its balance towards revenue is much supported, but there is no certainty that Central Bedfordshire will receive it, huge amounts of ofﬁcer time have gone into the project and if it is successful then much of it will be making up for the shortfall in funding from both the LTP and the overall revenue funding in the local authority.

3.6 Lack of improvements to publicity leading to lack of awareness of the service leading to lack of passengers leading to increased expense The cuts to local authority spending overall means even less money for publicity: In Worcester evidence collected by Sustrans and Social data showed that by just increasing the information on the existing bus services you could increase modal shift on buses from 6% to 18%. Locally: (a) There has been the risk that there would be no more timetable books, leaving those without internet access, unable to access the new timetables. There has been a similar risk in Milton Keynes. The timetable book in Leighton Buzzard has a simplified map of the bus routes so that you can see at a quick glance where you can get to by bus, and then check the time. Timetables are still difficult to use and understand and much more simplified publicity is needed, however the timetable books are a lifeline, and to lose those would mean that many elderly people would not be able to access the existing service. (b) Promotion of buses is very hard to fund. In Oxford there are simple signs on the bus stops outside the station saying buses to the city centre etc. This type of promotion makes it easy and simple for the “non anorak” to use the bus. Arriva has created a very good map—“Out and About” from Leighton Buzzard with a simple network pattern and sections on how to accessing theatres, hospitals. It would be great if they were displayed all over Leighton Buzzard. Simple explanatory signs at bus stops, and simplified maps like the London underground map make a huge difference in increasing patronage, yet it is time consuming and so cost money to create the right poster for the right bus stop. Erecting display cases and printing and designs costs add up. These are not large costs but in the present climate of local authority and lack of funding for buses it is very difficult to get the funding to do these sorts of measures despite their proven value for money. (c) Lack of funding for publicity means that other residents who might be keen to use a bus service as not aware of it. This means that service will not benefit from full fee paying passengers who could make the service significantly more commercially viable and so the cost to the local authority for subsidising the service will remain high and congestion will remain high. The steady increase in bus publicity due to our voluntary work in Leighton Buzzard has helped patronage and increased customer satisfaction.

3.7 Managed decline instead of profitable services 3.7.1 The 36 service is a Central Bedfordshire subsidised half hourly service mainly serving elderly people although it does pick up several people who work. It goes all around Linslade and then goes into town. It is a lifeline to many people. 3.7.2 The recent cuts to the 36have slightly affected the early evening service so that the last service from town now leaves at 5.12 pm. Therefore if you finish work in a shop or in a local business at 5.30 you are unable to take the bus back. 3.7.3 The real tragedy is that the cuts mean that there is no investment to improve, build on the existing service and increase the number of bus users and hence both reduce congestion and increase social inclusion. If there was investment: (a) The bus could start earlier in the morning so that commuters could access the trains to London or the bus/trains to Milton Keynes and other employment destinations. At present there is no bus from Linslade to the station in the early mornings. (b) The route could be split into two services so that it became a quicker more direct journey into town ago, then it would be a an attractive alternative to the car for trips to the town centre. At present it takes about 20 minutes to get into the town centre as it goes through all the estates whereas the car takes five minutes in a direct route. (c) On Saturdays when congestion is at its worst and there is a market in town, the service is only one an hour (to save money) so it is very unattractive to car users. If it was a direct route and every half hour, many shoppers would consider using it instead of the car and this would reduce congestion. (d) On Sundays and in the evenings there is no service which means that elderly people are completely isolated and cannot access any evening clubs or entertainment. They cannot access the concerts in the cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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Park on Sunday afternoons put on by the Town Council. Investment is needed to start up a Sunday and evening service but there is no funding. (e) Funding would also allow for more promotion for this service which would increase the patronage and therefore the viability. (f) Stockgrove Country Park is suffering from too many cars, if there were a leisure bus service like Brighton’s “Breeze up to the Downs” on Sunday it would really help those unable to access the countryside because they do not have a car and remove all the congestion, carbon etc which really detracts from pleasantness of Stockgrove Country Park. Alas there is no funding to kickstart this project, leaving the only option as high parking charges. These will still leave many people without a car unable to access the countryside on Sundays and making it more expensive for low income families with a car thereby increasing social exclusion and exclusion from healthy activities like leisure walking and outdoor activity can have health costs especially for children.

3.8 The role of councillors 3.8.1 I think that there has been a serious lack of understanding and support for local democracy and that councillors are in a very difficult position. Councillors often have little knowledge of certain areas, and very little training or opportunity for training in government policy and best practice. They often work over 40- hours a week for £11,000 a year with no secretarial support. The portfolio holders receive about £20,000 but then they often work 80 hour weeks with no secretarial support. These councillors have to make decisions on budgets of about £700 million and make incredibly difficult decisions. The leader of Milton Keynes Council works about a 100 hour week and gets only £33,000 yet has the most enormous responsibility in shaping the future of a city of 230,000 with huge housing growth and the challenges of implementing a low carbon economy. They have to respond to their electorate on a huge range of issues and often do not have the time to understand an issue. 3.8.2 I am very aware that as a campaigner linked to Campaign to Better Transport, the Station Travel Plan project and other local Friends of the Earth groups, I can access best practice and policy information much more easily than a councillor and sometimes more easily than council officers and as a campaigner I have the training and experience of communicating it. The skills of an officer do not always include being able to explain and summarise the issues which again makes it harder for a councillors to understand the issues. 3.8.3 My understanding is that most councillors do not understand many of the issues of buses, especially that it takes time and investment and publicity and marketing to build up a service and so frequently assume that bus marketing and information is an area that is easy to cut. Buckinghamshire County Council has cut most of its public transport information. There was serious risk of that happening in Milton Keynes. In Central Bedfordshire there has been a considerable fight to preserve bus information especially the bus timetable books which are a lifeline to elderly people. Councillors see services that are not well used because they are difficult to find out about and are very infrequent, assume that people do not want to use buses and then feel that the money spent on transporting a very small number of people would be better spent on nursery provision. In Leighton Buzzard councillors have held evening meetings for the public and when elderly people complain that they cannot get to the meeting as there are no evening buses, some councillors are very surprised that these elderly people do not know lots of people who can drive them to meetings and pick them up afterwards. 3.8.4 People dependent on buses are often the least articulate and the least able to lobby the councillors Five years ago they cut the 36 service to once an hour which caused huge distress. We gave leaflets to the passengers with their councillors names and telephone numbers. Councillors were amazed by the response and reinstated the service. Many of the passengers were amazed at the whole process of contacting a councillor and the councillor actually taking the time to listen to them. Most people in my experience are completely unaware of the difference between elected representatives and council officers and so will ring the poor receptionist at the town council and feel that they have done their bit by “having a go at her/him” From experience this is the least effective way to influence local government, It is filed and the usually ignored.. However unless there are active community groups such as Friends of the Earth who understand local government then many people are completely disenfranchised at a local level.

3.9 The challenges for officers 3.9.1 For many years although there has been large scale funding for capital schemes, revenue funding which is vital for supporting improvements to a bus service and for publicity in order to attract people to use the bus as shown by the Sustainable Travel Towns has been almost impossible to access. The lack of funding for revenue has led to a culture of almost despair within councils and total loss of hope for anything apart from minimal and thus ineffective spend on publicity and promotion. 3.9.2 Lack of funding leads to lack of promotion and investment which leads to a general despairing attitude that buses do not work. Successes like Dash Direct have huge impact on the enthusiasm of councillors for bus investment. In Central Bedfordshire many councillors and officers have endlessly said buses would be excellent but there is no funding. Due to the success of travel behaviour projects like Leighton Linslade Cycling Town and the success of Dash Direct and some very good public transport officers, backed by supportive senior cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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officers, the culture in Central Bedfordshire has become much more proactive towards buses over the last two years. 3.9.3 Little work has been on the Cost Benefit Ratio of bus schemes as opposed to the work on the CBR of cycling schemes led by Cycling England. These means that the case for investment in buses can be hard to make to other officers within a council, whereas cycling is getting increasing support. Council cuts can lead to fewer and fewer officers who understand buses. Cambridge and Brighton have benefited from senior officers who understand buses whereas some other authorities like Milton Keynes do not have senior officers who understand the CBR of buses and how to make them work. This affects the style of bids going into the Local Sustainable Transport Fund as some councils will concentrate on cycling not buses as there is the CBR evidence work and assessment guidelines that bus investment lacks. 3.9.4 A major challenge is that to run a network of subsidised services creates a certain very detailed approach “Anoraky”. However marketing the service to someone juggling work and a family and their other social commitments, a very simplified message is needed and general marketing expertise is needed for that it is unrealistic to expect one person to have both sets of skills. Therefore it is crucial for the future of buses that there is the budget for officers skilled in general marketing who have the time and budget to promote working with the existing public transport officers.

4. Cuts to BSOG 4.1 This will signiﬁcantly increase the problem. Arriva the Shires and Essex have senior staff who are keen to engage with and work with communities and local government and run the best service possible. However Arriva has had to make serious cutbacks. The number of backroom staff and senior management posts (crucial to engage with local government and other stakeholders) have already been seriously cut back. 4.2 The clearest example was that as chairman of Leighton Buzzard Station Travel Plan I am keen to make sure that the bus services stopping at the station integrates with the trains. One Arriva Service has a 20 minute wait between the trains and the time the bus arrives or departs which does not make it attractive to commuters. Changing bus timetables is tricky and extremely time-consuming as there are so many constraints and demands. Trying to resolve this I realised that there was no lack of willingness to be helpful on the part of Arriva, but simply the very small number of people dealing with a huge number of timetables meant that there simply were not the man hours to resolve this. The service carried enough people to be commercially viable and therefore it was not urgent to change the timetable. However not changing, potentially misses a considerable modal sift which would help reduce congestion. I have offered to spend some days on this in order to help the person who is in charge of timetabling and help with promotion as part of the station travel plan. This has been gratefully accepted by Arriva. 4.3 This reduction in staff has happened before BSOG cuts. These cuts will be about £1.7 million about 1% for Arriva the Shires. The company has already cut back as far as possible. They will probably have to cut frequencies, for example in Milton Keynes on the very attractive high frequency routes and reduce the services on Sundays and evenings. The problem with this is that the more frequent a service is the more attractive it is to use and therefore you get more passengers. Cutting it makes it less attractive and so less and less people use it. The cuts will mean smaller marketing budgets etc, so even less chance to grow the network. The cuts to BSOG will hasten decline. 4.4 This does put pressure on small organisation such as the Buzzer Bus which is running a commercial service as it increases it costs when it is already working on a small margin.

5. Concessionary Fares 5.1 The existing rate of return on concessionary fares for operators means that at present it is not really ﬁnancially worthwhile running a service which carries a large proportion of elderly people. The new changes to concessionary fares means a reduction in income of between 8% and 12%. This means that even though there could be huge demand for a bus service, if it is predominately elderly people it really will not be worth ﬁnancially for a private operator to do this. Services which carry elderly people to hospital can save the hospitals the cost of sending out ambulances pick up people individually. If elderly people are active and involved in their local community, their health is often better, saving costs to the NHS and social services, and they can live independently for much longer. The costs of elderly people not using buses could be huge to the country. 5.2 If it were worthwhile to carry concessionary fares then many operators could support a route which carries both concessionary and non concessionary. The concessionary fares if there was proper reimbursement could make the difference between a commercial route and a non commercial route for an operator. With the present cuts it pushes the costs of social inclusion back onto the councils whereas properly reimbursed an operator could run a commercial service costing far less to the taxpayer. 5.3 I am on the steering group for Dash Direct. I am pushing for all promotions which would encourage non concessionary fare users, for even through there is a large market of concessionary fares that we could tap to increase numbers, I am actively arguing against measures which would increase or even keep stable the number cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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of concessionary fares as I am very concerned that this could harm the ﬁnancial viability of the bus service as with the cuts concessionary fares are “not worth it”.

6. Recommendations 6.1 There should be ring fenced grants for both kick starting bus services and for some support for important non commercially viable bus routes, especially if they support elderly in rural areas and access to skills and work. 6.2 The grants should be easy to apply for to save on officer time and there should be evidence that a good marketing expert and campaign will take place and it contributes towards the overall simplifications and promotion of the whole bus network and it includes partnership working. 6.3 There should be evidence on Cost Benefit analysis so that it is much easier to apply fro and justify the economic case for bus improvements. 6.4 There should be an advisory body similar to cycling England which could advise and support and share best practice on creating and growing bus networks and create guidance on the CBR of buses. April 2011

Supplementary written evidence from Victoria Harvey (BUS 104a) Thank you very much for inviting me to speak at the Transport Select Committee on May 3rd and the excellent job that the committee is doing. I am very concerned that I did not manage to explain how hard public transport officers in Central Bedfordshire work to provide the best service to the residents of Central Bedfordshire. Our Officers work incredibly hard and are very good. Their challenge is not only, that only two staff cover the whole of Central Bedfordshire, but that role and effectiveness of buses in reducing congestion is not understood by many people. The bus operations are often in a different department to transport strategy. The challenges to funding, the lack of promotion of the effectiveness of buses in reducing congestion such as the example of the Sustainable Travel Towns and especially the lack of kick start funding for buses mean that many councillors and other officers in the councils feel that buses are a lost cause and not worth investing in. Ring fenced funds for marketing buses and for kick start funding of buses as well as strong advocacy for buses from business leaders and MPs, are crucial. I really liked your phrase—“the cocktail of cuts”. It does sum up the incredibly depressing picture that we have here of cuts. Even if there is no kick start funding and the Local Transport plan—integrated block funding is cut, routes reliant on concessionary fares could be developed and run commercially, however the cuts to concessionary fares mean that operators cannot commercially run routes which are mainly concessionary fares. This leaves us with increasing decline, increasing cost to business through congestion and increasing social exclusion and no matter how hard we work as a voluntary group—no real hope of this improving. May 2011

Written evidence from David Redgewell (MCA 126a) Please ﬁnd links below of the latest Bus Service cuts proposed by Wiltshire County Council effecting services in Whiltshire and into Bath, Swindon and Southampton. The Thamesdown Transport Service supported services have also been cut by Swindon Borough Council and update and refurbishment works on Swindon bus station. Including allowing peeling paint in Travel Centre. Gloucestershire has also started a consultation on cutting two million bus revenue support in Gloucestershire and into Bristol, Bath and Hereford evening and Sunday services in Stroud, Gloucester and Cheltenham from October 2011. Wiltshire cuts are from September 2011. Lastly, Jan Royal Patch in Gloucestershire and the Forest is affected by these cuts. www.wiltshire.govuk/bus-service-changes-chippenham-calne.pdf www.thisisgloucestershire.co.uk/Bus-routes-threat-Gloucestershire (13 May 2011) www.wiltshire.gov.uk/bus_service-changes-amesbury-tidworth-pewsey-malborough.pdf www.wiltshire.gov.uk/bus-servicechanges-devizes-melksham.pdf www.wiltshire.gov.uk/bus-service-changes-salisbury-southern-swwilts.pdf www.wiltshire.gov.uk/bus-service-changes-westbury-warminster.pdf cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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www.wiltshire.gov.uk/parkingtransportandstreets/publictransport/busservices/ busservicessalisburyretendering.htm April 2011

Supplementary evidence from Community Transport Association UK (BUS 28b) When Louise Ellman questioned me during my appearance before the Transport Committee and asked me about how much of the gap created by the loss of subsidised scheduled bus services community transport could fill and I said probably 10–15% of the total, I was specifically focussing on Section 22 services (the first of the categories of CT listed in Brian’s email you), and not all of the other categories of CT provision. The CTA’s view remains that with more support and investment from local authorities and Government, CT organisations would be able to build capacity to deliver new Section 22 services and so meet the local transport needs of communities, particularly in rural areas. June 2011

Further written evidence from the Chartered Institute of Logistics and Transport in the UK (BUS 30b) Introduction 1. The Chartered Institute of Logistics and Transport in the UK (“the Institute”) is a professional institution embracing all transport modes whose members are engaged in the provision of transport services for both passengers and freight, the management of logistics and the supply chain, transport planning, government and administration. We have no political affiliations and do not support any particular vested interests. Our principal concerns are that transport policies and procedures should be effective and efficient and based, as far as possible, on objective analysis of the issues and practical experience and that good practice should be widely disseminated and adopted. 2. The Institute has previously made two detailed submission in response to the first and second calls for evidence by the Committee. This supplementary evidence deals with changes to the Vehicle and Operator Services Agency’s staffing arrangements subsequent to the CSR that relate to the monitoring of bus services and examination of vehicles.

Changes to the Vehicle and Operator Services Agency Bus Work 3. It has come to the attention of the Chartered Institute of Logistics and Transport that a consultation by the Department of Transport with the Bus Partnership Forum (Annex attached) dated 6 April 2011 proposed to absorb the work undertaken by Compliance Ofﬁcers (“Bus Monitors”) into the duties of the Vehicle Examiners. 4. A Freedom of Information request answered by VOSA on 29 May 2009 showed 19 Bus Monitors were in post in May 2009 distributed as below: NUMBER OF BUS COMPLIANCE OFFICERS No of Area posts April May June July August Sept Oct Nov Dec Jan Feb March Eastern 10000 0000001 1 North East/North 44444 4444333 3 West Scotland 65555 5565566 6 South East 21111 1122222 2 Wales 33333 3333333 3 West Midlands 11111 1111111 1 Western 22222 2222222 2

5. The Vehicle Examiners (VEs) are qualified mechanics who may well feel that their skills are not best used in recording passing times of buses on clipboards, although some may be more adaptable if it has higher technical content, for example interpreting data from Automatic Vehicle Location (AVL ) systems. Almost certainly VEs will not have applied for their jobs on the basis that they will spend a significant proportion of their time monitoring bus service performance. 6. The reality appears to be that VEs with additional training should spend pending 20–25% of their time on compliance work in an attempt to mitigate the shedding of 19 or so posts—many considered this number to be too small and thinly spread to be terribly effective anyway—as an improvement in service as it is intended. 7. However, looking more closely at the DfT’s figures 20–25% of 80–100 VEs trained in bus compliance work equates in Full Time Equivalents (FTEs) to 16 to 25 posts with a median of perhaps 20—in DfT’s words “… (around four to five examiners per VOSA enforcement office), giving a greater physical presence on the cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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ground.” But these ﬁgures involve two ranges (20 to 25% and 80 to 100 posts) and given the constraints on expenditure the net increase may be is from 19 to perhaps 20 or so FTEs, not a really signiﬁcant net increase in compliance monitoring resource!

Conclusions 8. Prima facie it is difﬁcult to escape the conclusion that this is a cost-saving exercise by VOSA and that, given the circumstances and timing, it can be related directly to the CSR. 9. Whilst there may be little to concern PTEs, counties and unitary authorities that have the luxuries of either or both of data streams from AVL or survey forces that can combine performance monitoring with data collection for concessionary travel reimbursement purposes, for most areas this will still mean inadequate resources to enforce effectively the Trafﬁc Commissioners’ efforts to drive up and police performance standards. 10. A further cause for concern is that VOSA’s costs are supposed to be recovered from operators. As there is no diminution of licence fees, operators could rightly be concerned: (a) by the reduction in resources concerned with vehicle examination, directly related to roadworthiness and safety, by up to 25%; and (b) at the apparently small increase in resources for compliance monitoring gained by this redeployment. 11. This suggests that the value for money of licence fee payments may be being reduced. CILT is not aware of any direct consultation outside the paper for the Performance Improvement Group appended. June 2011

Annex BUS PUNCTUALITY PARTNERSHIPS: CHANGES TO THE VEHICLE AND OPERATOR SERVICES AGENCY BUS WORK TO SUPPORT THE PARTNERSHIP APPROACH Introduction 1. The Department for Transport (DfT) has made it a priority to encourage sustainable local travel and economic growth by making public transport more attractive and effective, promoting lower carbon transport and tackling local road congestion. Buses have a key role to play in meeting this challenge as they are the most used form of public transport. Since punctuality is invariably cited as the most important issue for passengers, delivering high punctuality levels is essential to keeping existing passengers and attracting new ones. 2. The key to delivering high standards of punctuality is partnership working and good relationships, primarily between operators and local authorities but also with other interested parties such as Passenger Focus. Ministers are very keen to promote partnership working. To facilitate partnerships DfT developed with representatives from local government, the bus industry, passenger groups and enforcement bodies, a set of shared punctuality partnership principles and supporting guidance (soon to be republished). 3. To support the partnership approach DfT has agreed with the Vehicle and Operator Services Agency (VOSA) changes to the punctuality work that VOSA undertakes. The emphasis will be on prevention rather than sanction, with the main focus on facilitating partnerships and ensuring the right systems are in place. This should bring a number of benefits, whilst ensuring that the Traffic Commissioners can continue to take effective enforcement action when appropriate. The Senior Traffic Commissioner supports the new approach.

What does this mean in practice? 4. The main difference will be that VOSA will focus on working with operators and local authorities to facilitate improvements. Instead of having a small dedicated bus compliance team, the role will be integrated into frontline examiner work. This will form around 20–25% of an examiner’s workload, with between 80 to 100 examiners trained (around four to five examiners per VOSA enforcement office), giving a greater physical presence on the ground. 5. Examiners will have a more proactive approach discussing punctuality issues with operators when carrying out new operator visits, following up complaints, visiting the operator for other reasons eg driver maintenance or drivers’ hours checks and on an ad hoc “cold” call basis—in particular with “high risk” operators, rather than just acting on complaints. During visits they would look to understand the systems in place for monitoring punctuality, and provide guidance and advice on immediate improvements that could be made. 6. Examiners would liaise with local authorities to understand what actions they are taking to address issues affecting the punctual running of services, such as traffic management issues. Examiners would help facilitate and support local bus punctuality partnerships and promote good practice. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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7. Partnerships would be given time to work as long as examiners have evidence that the parties are doing all they can to deliver a high standard of punctuality. This will require details of the partnership, including reports on the levels of punctuality and reliability on which performance was benchmarked and against which progress is monitored, to be shared with the examiners. 8. Where performance is poor and partnerships are not working or do not exist, or where VOSA advice and guidance or requests for information are being ignored, the matter would be referred to the TC for them to decide what action, if any, should be taken. If a Public Inquiry was deemed necessary by the TC evidence would be gathered by the examiner, although the TC might also request information direct from the operator or local trafﬁc authority. 9. In addition, there will be a central co-ordinator role established to receive, sift and disseminate work (similar to the current Bus Compliance Manager). They will also be a focal point for operators and will monitor trends to assess if issues are more “area” related than down to an individual operator enabling a more holistic approach to be taken to identifying problems.

Benefits of the new system 10. In summary, the approach will bring a number of benefits, including: — both operator and local authority responsibilities taken into account; — allows more operators and local authorities to be visited; — passengers could see improvements quickly, as operators can immediately address any issues identified during examiner visits; — in the long-term it will allow a more targeted approach, as examiners will be able to focus on areas where punctuality is not improving; — encourage a culture where information on punctuality is shared freely; and — Traffic Commissioners will have a complete picture as to what the problems are when considering appropriate enforcement action.

Next steps 11. The new system will be introduced gradually from June 2011 with full role out by end of 2011–12. Details of where the first area will be still have to be confirmed. During this period there will be some joint running with the existing bus compliance officer team until the transition is completed. Buses and Taxis Division Department for Transport 6 April 2011

Further written evidence from Arriva UK Bus (BUS 38a) VOLUNTARY CODE OF PRACTICE Arriva readily recognises the need to consult prior to any service change. We will approach both LTAs and any other relevant stakeholders. However, Arriva does not believe a voluntary code of practice is helpful: — Changes to commercial services differ to changes to contracted services (dictated by the LTA). — The enormity of the change will dictate different levels of consultation (lead time and extensive discussion); there are different degrees of “signiﬁcant changes”. — The nature of the local relationship between LTA and operator will inevitably mean different expectations regarding an appropriate process. For all these reasons, Arriva does not see this as a sensible suggestion. May 2011

Further written evidence from David Redgewell (BUS 126a) Bus Stations and Interchanges in the South West Places where bus station improvements and renovation have been stopped as part of CSR. — At the Stroud Merrywalk bus station, new shelters have not been proceeded with. — The Gloucester bus station regeneration project is on hold. — At Exeter and Plymouth—the latter being one of the of the worst and dilapidated bus stations in the country—the projects to improve the bus stations have simply stopped. cobber Pack: U PL: CWE1 [O] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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— At Illfracombe, another RDA project, things have come to a halt even though this is a gateway to Exmoor used by Tourists, North Devon and West Somerset—some 50,000 people are in the catchment area. — The new ferry link to S Wales has been cut too. — The St Austell interchange is on hold. EU money but the project stuck as RDA cash as gone. The LEP might take it up. — Bridgewater and Yeovil bus stations are not being improved either—Sedgemoor District Council funds have gone. — The toilets at Bridgewater are closed to save money. — The Bridgewater bus station and Terminal buildings are the café have been sold off at auction in London by West Dorset District Council. — Weymouth Olympic Authority bus and rail interchange under construction has been cut back but a cheapo version “scaled back with no national express facilities” is going ahead. That said showcase bus routes are happening, so far. However, given other country’s expectations of public transport, the whole thing needs scrutiny too avoid embarrassment. The whole issue of people arriving by ferry is also chaotic—it is not properly planned. The use of the harbour tramway has not been carried forward as originally was the idea.

Bristol—a non-European city The fate of a Bristol Temple Meads transport interchange is a sad recognition of the failure of public transport in the south west. The current interchange is very poor and gives a bad impression. Yet nothing is to be done about it, and the land that could make all the difference, to be sold off. The land around the station was acquired by SW RDA some years ago for a bus station, river ferry terminal, tram terminal and taxi interchange. The land includes safeguarding of a former railway line through the site to link the harbour railway to Ashton Gate. Passengers would alight approximately 100 metres from the entrance to the station where the Brunel Rail centre is. The government is proposing to auction the surplus railway land at the station which is vested with the RDA for transport purposes at public auction. The land is not being transferred to the WoE partnership LEP which covers greater Bristol. If the land goes to development, housing and ofﬁcers, then the interchange will not happen, and nor will the rapid transit from Temple Meads. The bus (called rapid transit) would fail to make it to the station because it would simply have a stop on Temple Way with the other buses. The alignment of the “rapid transit” busway also prevents any future ultra light rail service along the Harbour railway. This is an operational tourist railway which runs off the Portishead line which North Somerset and Bristol City Council wish to turn into a busway similar to Cambridge but with mass public opposition from the public and amenity groups who are favour instead of upgrading the bus services from Somerset, such as to and from Clevedon, Nailsea and Portishead with modern buses with Wi-Fi, TV screen and leather seats. The problem at the moment with bus services is that they suffer from congestion. Although the route from Hotwells to Ashton Gate has just been upgraded, buses get stuck as they go out of town over the city boundary and into North Somerset and the Long Ashton Area. While the showcase bus route to Weston has bus priorities and works well, the routes to major towns like Nailsea and Clevedon and Portishead do not have bus priority measures and the buses take a long time. The buses are in addition old and non-low ﬂoor and have not been upgraded by the government to Bristol Bus network standard.

Ultra light rail and bus Within the city of Bristol there is a lot of support for ultra light rail. This is a lightweight rail bus which is electric and runs on rails on ordinary railway line or tramway—which the harbour railway is, and was the test- track for the original light rail idea. They can have two cars like trams. At present the business groups and the rail industry have got a consortium in Bristol which would like to use the Harbour Railway and adjacent Portishead brach as a link to the city centre and Temple meads as an alternative to BRT2, using this corridor. This is line that goes from BTM to Ashton Gate Park and Ride and links at the junction at Parson Street to the Portishead Line. This is subject to a bidding case to the DfT by Serco Railways Rotala plc and Kirbridge Rail. If bus based rapid transit goes forward on the basis of simply providing better buses and better bus lanes and those already in the greater Bristol Bus network, including BRT3 to Emerson Green, then we can still run the trams and upgrade the Metro services as part of the Great Western Rail franchise. However if a Cambridge busway-style system uses the Harbour Railway and the Portishead Line, the result will be that tram or light rail and upgrade of Portishead, Severn Beach and Henbury lines will be put at risk. cobber Pack: U PL: CWE1 [E] Processed: [02-08-2011 15:28] Job: 012933 Unit: PG04

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This will then affect upgrades to local rail services to Somerset—Weston, Taunton, Highbridge, Frome, Bridgewater, Bath and Keynsham.

Critical nature of bus and rail together This Bristol Taunton rail service provides a vital rail service into the bus feeder network. You need both rail and bus. People go on the train and then take the bus.

Large communities cut off After 7.00pm there are no buses from Weston to Clevedon, Weston to Cheddar and Well and Shepton, Similarly there are no buses from Bath to Shepton after 4.00pm and to Wells after 7.00pm. Nothing runs from Yeovil stations at all after 7.00pm—a town of 60,000 has no buses from the station or in the town, or into neighbouring Dorset after 6.30pm or 7.00pm. The whole of Somerset now has just four Sunday bus service ie “runs” in all it rural area. These are Taunton Minehead (alongside the West Somerset Big Society Volunteer Railway—Summer Only Cameron’s Trainset) Taunton-Exeter, Taunton Burnham on Sea, Bristol-Yeovil and Well Glastonbury and Street paid by Bristol and BANES, and Bath to Wells via Midsomer Norton, Weston to Cheddar and Wells Bath to Frome. These are generally every two hours, and all there is on Sundays. Yeovil Bridport—the 47—is provided by Dorset.

Update Wiltshire has just announced the likely slimming back of evening and Sunday services for July and September with mainline corridors involved. Gloucestershire today has announced two million of cuts and consultation programmer including Royal Cirencester and Tetbury, Stroud, Gloucester, Cheltenham, the Forest of Dean and trunk routes from Swindon to Cirencester, Bristol to Dursley via Thornbury, Thornbury to Gloucester via Berkley, Bath to Yate and Tetbury and Stroud and Gloucester to the Forest of Dean. Even Cheltenham would be hot by cuts proposed for October.

Closure of bus depots We are concerned about RMT and Unite jobs and the closure of rural bus depots in the South West many of which go back to the days of when the railways owned the bus companies in the South West. We are concerned about the rural bus depots—Minehead, Westbury, Camboure, Truro, Penzance, Barnstaple, Stroud, Swanage, Salisbury, Bridgewater, Taunton, Weymouth, Dartmouth, and Blandford, Tor Point in Plymouth, Bude, Newquay, Pewsey, Swindon, Bristol, Cheltenham and Gloucester and Forest of Dean. Bus drivers and inspectors, maintenance staff etc, engineers 8,000 jobs in total in RMT and Unite. These are in companies that are unionised—First Group SW and Wales, GoAhead South Coast, Wilts and Dorset and Plymouth City Bus, Hants and Dorset and Southern Vectors. Western Greyhound and Webber Bus, Wiltshire Bus, Stagecoach SW and West, Thamesdown Transport.

Concessionary fares We are extremely concerned that the coalition government has withdrawn the concessionary fare travel money for National Express Megabus, Greyhound and other Express operators such as Bakers (Bridgewater Weston London) and Berry’s Coaches (Taunton Bridgewater Yeovil London). This without public consultation. The government withdrew the 1/2 price concession for senior citizens and the concession for disabled and youth travel. The 2003 concession was withdrawn in the CSR without consultation. This was won by Transport 2000 and Bus users UK. We support the Bath and Weston packages where buses are concerned. Alternative routes need however to be discussed beyond Western Riverside. We support the upgrade of 9 bus routes. May 2011

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