Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence


APPENDICES TO THE MINUTES OF EVIDENCE

Memorandum by the Department for Transport, Local Government and the Regions (Bus 01)

INTRODUCTION

  1.  As requested this memorandum addresses bus subsidies and challenge initiatives; Quality Partnerships and Quality Contracts; bus priority measures and their enforcement; and regulation of the bus industry.

  2.  By way of overview, the Government's 10 Year Plan for Transport set a target of increasing bus passenger journeys by 10 per cent (while improving punctuality and reliability) by the year 2010. Between 1950 and 1998-99 bus passenger journeys fell by two thirds. During 2000-01 England saw an increase of 0.8 per cent including 4 per cent in London. The average age of the bus fleet has been falling since 1994 and is now 8.4 years. Our latest survey results for bus passenger satisfaction show an average satisfaction rating of 79 per cent in England (75 per cent in London). Passengers are less satisfied with information provided at the bus stop and with bus service reliability. Our reliability survey shows that in the period quarter December 2001, 1.7 per cent of scheduled mileage was lost in England (3.9 per cent in London) due to reasons such as staffing problems and traffic congestion.

  3.  There is clearly scope for improving bus services. The Secretary of State has already said to the Committee that the Department is looking very closely at the bus network and ways of delivering improvements. The Minister for Transport is in discussion with local government and the Confederation of Passenger Transport to identify obstacles and how they might be overcome. The Government will also be considering recommendations from Commission for Integrated Transport (CfIT) on achieving value for money in bus subsidies and from the Social Exclusion Unit. We are determined to make buses a more attractive choice of transport for a wider range of people.

BUS INDUSTRY REGULATION

  4.  Since 1985 the majority of local bus services outside London—some 83 per cent— are run on a commercial basis by private companies. It is for individual operators to make decisions on the level of fares, routes operated, and frequency of those services. The remaining 17 per cent of services are subsidised by local authorities under contracts specified by them.

  5.  The Transport Act 2000 included a number of measures to strengthen the regulatory arrangements in England (outside London) and Wales. These include the introduction of statutory bus quality partnerships and quality contracts (discussed further below), and the requirement on local authorities to draw up bus strategies, addressing the needs of their area, as part of their Local Transport Plans. In addition, the Act empowers authorities to oblige operators to offer a range of joint ticketing and to step in to provide proper passenger information at the operator's expense, if existing arrangements are inadequate.

  6.  The main features of current regulation for bus services are:

Public Service Vehicle (PSV) Operator Licensing

  7.  The primary objective of operator licensing is to safeguard the travelling public. Before they run services, operators carrying fare-paying passengers must obtain a PSV operator licence from the relevant Traffic Commissioner. The Commissioner must be satisfied that operators are of good repute, of appropriate financial standing, are professionally competent and have appropriate maintenance arrangements for their vehicles. Traffic Commissioners have powers to curtail, suspend, or in extreme cases, revoke licences where they find that operators are not meeting the requirements of operator licensing.

Local bus service registration (outside London)

  8.  The purpose of registration is to make operators accountable for the reliability of services and to provide an element of stability in the bus network. Bus operators have to register the details of each service with the local Traffic Commissioner—such as route and timetable information—and must operate the service in accordance with the registration. Operators must give notice to the Traffic Commissioner if they wish to cancel or vary the particulars of a registration. On 1 March 2002 new regulations were introduced to increase the notice period from 42 to 56 days and abolish the "five-minute rule" (which had allowed operators to vary the timings of individual services by up to five minutes either side of the registered time, without informing the Traffic Commissioner).

  9.  The Traffic Commissioners, often acting on complaints from bus users, monitor the performance of individual local bus services and compare them to the registration. Those operators found to be running unreliable services can face disciplinary action leading to financial penalties (the Transport Act 2000 introduced greater flexibility in the amount of penalty that can be levied).

Competition

  10.  The bus industry is subject to the provisions of competition and fair trading legislation as recently strengthened by the Competition Act 1998. There is a block exemption for certain joint ticketing schemes and other schemes may be granted individual exemption. DTLR is in discussion with the Office of Fair Trading to ensure that competition law is applied transparently and consistently with the Government's integrated transport objectives.

London

  11.  The structure of the bus network in London, including routing, frequency of services and fares is determined by the Mayor and Transport for London (TfL). Buses' efficiency, reliability and safety is managed through contracts with the bus operators. Virtually all local bus services are run by private companies under contract to TfL. All new contracts and many existing ones are gross cost contracts, which entail operators bidding to run a service at a fixed cost, with the revenue being retained by TfL. Buses are a key element of the Mayor's transport strategy which aims to make buses the first choice for a greater number of journeys.

  12.  This year the Mayor's transport grant is around £700 million. TfL has spent about £190 million on London buses for contracts, infrastructure, fares subsidy and a £20 weekly bonus for bus drivers.

SUBSIDIES FOR GB BUS SERVICES

  13.  In total bus services receive over £1 billion annually in central and local government support. The main elements of revenue support are:

    —  Fuel duty rebate (FDR) paid to bus operators. FDR repays about 80 per cent of the fuel duty paid by operators of local bus services. The Commission for Integrated Transport (CfIT) have been considering possible alternatives to the current FDR arrangements for bus services and are due to publish their recommendations in the autumn. £365 million was paid in 2001-02 to bus operators (£305 million in England from DTLR; £50 million in Scotland from the Scottish Executive; £10 million in Wales from the National Assembly for Wales).

    —  Local authority funding for contracted (non-commercial) services outside London. In 2000-01 English shire counties spent £135 million and English metropolitan areas £125 million on the support of bus services (the figures for Scotland and Wales were £28 million and £14 million respectively). The English totals include expenditure met from ring-fenced grants from the DTLR under Rural Bus Subsidy Grant (RBSG) and Rural Bus Challenge (RBC) schemes. RBSG spending is set to rise to £48.5 million in 2003-04. More generally, local authorities make their own decisions on how much of their total resources—including that provided by Government through revenue support grant—to devote to bus support. Ministers are aware of concerns about increased pressure on bus budgets, partly due to higher tender prices and withdrawal of some commercial services; and have taken these pressures into account in recent revenue support settlements. The overall settlement for 2002-03 provides for an increase in Government revenue grant to local authorities of £3.3 billion.

    —  Funding for local authority concessionary fare schemes. Local authorities reimburse transport operators the difference between the discounted fare and the full adult fare, on the basis that transport operators should not be any better or worse off as a result of carrying passengers at concessionary rates. Concessionary fares expenditure is taken into account in the revenue support settlement. In 2001-02 Government took into account expenditure by local authorities of £485 million (£434 million in England, £42 million in Scotland and £10 million in Wales). This includes additional provision to assist local authorities with implementation of the new statutory half-fare minimum standard for older and disabled people, which came into force in June 2001.

  14.  Buses also benefit significantly from Local Transport Plan (LTP) funding for capital schemes. £1.5 billion is being distributed to local authorities in England to implement their Local Transport Plans in 2002-03 (an increase of £200 million over the 2001-02 total). This is the second instalment of the five year, £8.4 billion funding package for local transport announced in December 2000. LTP expenditure includes upgraded bus routes, new bus priority measures bringing faster and more reliable services, park and ride schemes and improved public transport interchanges. The LTP process has also involved approval of four new guided bus systems: Bradford (opened January 2002), Crawley Fastway, East Leeds Quality Bus scheme and Chester Deeside Transport System. (These are in addition to the existing guided schemes in Ipswich and Leeds dating from 1995).

THE CONTRIBUTION OF BUS SERVICES TO REDUCING SOCIAL EXCLUSION

  15.  Bus services can play a significant role in tackling the social exclusion of individuals, groups or communities. Key issues include the availability, affordability, accessibility and acceptability of services. The bus is the most important mode of public transport for people on low incomes. More than 90 per cent of public transport journeys made by those in the lowest income quartile are made by bus. Low income households without cars use the bus for 20 per cent of their trips, compared to between 2 and 4 per cent of households with cars. Bus users are more likely to be in low income groups, and to be children or young adults or aged over 60, than middle aged or middle income. Women use buses more than men.

  16.  The accessibility of the bus fleet to those with mobility difficulties is improving as a result of the high level of investment by the industry in recent years in new, more accessible, vehicles. New buses are now required to be wheelchair accessible. Introducing low floor wheelchair accessible buses also provides better access for others with restricted mobility, carrying heavy luggage or using buggies. Around 60 per cent of the London bus fleet is wheelchair accessible and TfL hope to have low floor buses on all non-Routemaster routes by 2004-05.

  17.  DTLR is taking specific initiatives to improve local bus services for low-income groups and in areas of social exclusion; for example, through the Rural and Urban Bus Challenges (please see below). From 1 May this year fuel duty rebate is being introduced for the first time for a wide range of community transport services including those for many socially excluded groups. In April 2002 we are publishing "Get on Board: An Agenda For Improving Personal Security In Bus Travel", to coincide with the Confederation of Passenger Transport's Secure Bus Conference. Concessionary fares available to older and disabled people also make a significant contribution to reducing exclusion.

  18.  The Social Exclusion Unit is currently looking at how transport problems contribute to social exclusion and what can be done to deliver improvements. Their interim report includes a number of recommendations on improving bus services and we will look forward to receiving and considering their final report.

BUS CHALLENGE COMPETITIONS

Rural Bus Challenge

  19.  The Rural Bus Challenge, established in 1998, is aimed at stimulating innovation in the provision and promotion of rural public transport, improving quality and choice across the country. Four annual Challenge competitions to date have provided for 213 awards totalling £69 million. Many of these have involved community transport provision and the Department has encouraged local authorities to work closely with community transport providers to develop and take forward Challenge projects. A total of £60 million has been allocated to this scheme for the period 2001-02 to 2003-04. The impact of Rural Bus Challenge (and Rural Bus Subsidy Grant) funding is currently the subject of a research project commissioned by the Department which will report in the autumn and which will identify good practice funded through the scheme.

  20.  Examples of RBC schemes that have been awarded funding are:

    —  Lincolnshire—InterConnect (£771,500)—Building on the success of earlier RBC schemes, to apply the same "InterConnect" strategy on the Lincoln to Grantham corridor; includes increased service frequency, an interchange hub at Caythorpe, a new demand responsive feeder minibus.

    —  Cheshire—Chester-Whitchurch Corridor—a rural Bus Quality Partnership (£718,000)—Joint scheme by Cheshire and Shropshire to develop a rural bus quality partnership along the rural corridor between Chester and Whitchurch, providing links to Whitchurch Hospital and the rail stations at Chester and Whitchurch.

Urban Bus Challenge

  21.  The introduction of an Urban Bus Challenge scheme to improve transport provision for deprived urban areas was announced in the 10 year Transport Plan. It is based on the model of the successful Rural Bus Challenge competition and contributes to the Government's aims to address social exclusion. Funding of £46 million has been allocated over three years and the first Urban Bus Challenge competition took place in 2001. Awards announced in November provided £15.3 million to 32 separate projects around the country.

  Examples of bids successful in the 2001 competition are:

    —  Blackpool (£809,225)—development of the "lifestyle line". Allows residents of two very deprived wards to access major employment sites and hospital with a high frequency, easy to use, accessible and well publicised bus service.

    —  The Telford Integrated Taxi Network scheme (£615,013) aims to link residential areas with centres of employment and bus interchange sites through provision of a shuttle bus service into each of three industrial estates, together with development of a town-wide taxi-sharing scheme.

  Both Rural and Urban Bus Challenge competitions have been heavily over-subscribed with bids well exceeding the sums available.

THE IMPORTANCE OF BUS PRIORITY MEASURES AND THEIR ENFORCEMENT

  22.  Bus priority measures are typically introduced on routes where buses are subject to delays that increase running times, reduce service reliability and inhibit effective scheduling. The first bus priority schemes typically took the form of bus lanes on approaches to traffic signals. These and other measures, such as bus-only roads or turns and bus gates, enable buses to bypass queuing traffic. More sophisticated techniques generally involve signalling systems to give priority to buses, for example queue relocation, demand responsive signals and selective vehicle detection where buses can trigger extended green times.

  23.  Bus priority schemes typically achieve journey time savings of two to three minutes on average, or exceptionally five minutes per journey. Schemes can also improve reliability of journey times allowing more efficient scheduling for operators and a more regular service for passengers. Quality Whole Routes (Flagship Routes) in London aim to achieve an overall peak journey time reduction of 20 per cent, including a 10 per cent reduction in bus stop dwell times. Physical bus priority measures combined with initiatives to improve service quality and performance—such as real time information, improved passenger accessibility and enhanced on-board security and comfort—provide a platform from which to market services and increase patronage, especially when implemented on a whole route basis. For example, Showcase routes in the West Midlands, have achieved patronage increases of up to 30 per cent on selected routes.

  24.  Bus lanes and other priority measures can be cost effective at service levels of 10 buses per hour in one direction, sometimes lower in specific cases. Pedal cycles can usually use bus lanes, as can taxis in many cases. Newer variations on bus lanes include no car lanes, a concept introduced in Newcastle with some success, and high occupancy vehicle lanes, used in Leeds and Bristol with mixed success, but clearly showing benefits to bus users.

  25.  Bus priorities are implemented by local authorities using physical measures and traffic regulation orders (TRO) made under the Road Traffic Regulation Act 1984. The impact on other road users is an important factor where—as is often the case—road widths mean that bus lanes cannot be readily accommodated and careful design is required. Setting back bus lanes from junctions and queue relocation schemes can avoid reducing capacity unduly for other traffic.

  26.  The Ten Year Plan has unlocked funding for authorities five-year Local Transport Plans which include substantial bus priority components, especially in the conurbations and larger towns and cities. Priority measures feature strongly in Quality Partnerships as part of the package that authorities will provide, to complement the commitments by bus operators. Operators see them as important to enabling them to deliver their improved services, by protecting their buses from the effects of other traffic. In a few cases operators have contributed to funding the measures. By means of the publication Keeping Buses Moving (Local Transport Note 1/97) DTLR has disseminated best practice advice on the design and implementation of schemes.

Enforcement

  27.  While many bus priority measures, such as bus gates and vehicle detection systems can be self-enforcing, the effectiveness of bus lanes can be significantly reduced by illegal parking or lack of compliance by other road users. Generally, traffic enforcement action rests with the police. Where authorities have taken on decriminalised parking enforcement powers (ie in London and over 40 authorities outside) local authority parking attendants can issue penalty charge notices to vehicles which stop in bus lanes or at bus stops in contravention of a TRO.

  28.  In London, Boroughs and Transport for London can undertake civil enforcement of moving contraventions of bus lanes. This involves using on-bus or roadside CCTV cameras to record the registration numbers of offending vehicles and issuing a penalty charge notice to the registered keepers. The level of penalty charge is £80. Trials in Newham and Croydon showed improved peak period compliance improved by up to 95 per cent and bus journey times reduced by 15 per cent. Civil enforcement is now being rolled out across London's bus network.

  29.  Regulations are currently being prepared under section 144 of the Transport Act 2000 to enable regulations to be made for civil enforcement of bus lane contraventions by approved local authorities outside London. Authorities must also have taken on decriminalised parking enforcement powers so they can deal with both stationary and moving contraventions of bus lanes. Regulations will be in place later this year.

  30.  Monitoring is being carried out by the Department and LAs across a range of schemes to inform future guidelines on the effectiveness of bus priority measures and to disseminate experience and expertise on innovative techniques.

THE RELATIVE MERITS OF QUALITY PARTNERSHIPS AND QUALITY CONTRACTS

Quality Bus Partnerships

  31.  A Quality Partnership is essentially an arrangement under which local authorities and bus operators agree to deliver improved bus services through a combination of infrastructure improvements and enhanced quality standards. Typically this involves the local authority upgrading bus shelters and/or implementing bus priority measures, in return for operators meeting certain quality standards such as new, low floor or low polluting vehicles. Operators must meet the quality standards set by the local authority for the Quality Partnership location to take advantage of the special facilities.

  32.  Many such arrangements already exist in voluntary form around the country. Line 33 in the West Midlands has been one of the notable successes. Patronage has increased by 21 per cent since inception with 17 per cent of new users shifting mode from the car. In Brighton and Hove, 5 per cent network growth has been achieved since 1994 through the Quality Partnership approach.

  33.  The Transport Act 2000 provided local authorities with new powers (brought into force in October 2001) with regard to statutory Quality Partnerships and Quality Contracts.

Statutory Quality Partnerships

  34.  Statutory QP schemes mean both parties should have greater confidence to invest, knowing that they are each under statutory requirements to deliver on their obligations. A statutory scheme is enforceable. Failure by a bus operator to meet the agreed standards would be treated as a breach of his bus registration and would attract penalties from the Traffic Commissioners. There is a clear duty on the authority to provide the specified facilities while the scheme remains in operation (unless there are exceptional circumstances); failure to do so would be actionable in court.

  35.  An authority or authorities can implement a quality partnership without Ministerial involvement if satisfied that the scheme will help implement the policies in its bus strategy (which forms part of its statutory local transport plan). There are requirements as to prior notification and consultation, including with bus operators and bus user interests.

  36.  In England the standards the local authority can specify cannot include requirements as to frequency or timing of services. In Scotland they may include requirements as to the minimum frequency of services. But they may not include requirements on timing or the maximum frequency of services.

Quality Contracts

  37.  A Quality Contract provides full local authority control over bus services (routes, frequencies, fares) throughout the relevant area. This is done through competitively tendered contracts for up to five years. These are enforced by the local authority, as contracting entity; Traffic Commissioners no longer have a role. In England Quality Contracts schemes may only be made if:

    —  an authority is satisfied that the scheme is the only practicable way of implementing the policies set out in its bus strategy, and that the scheme will do so in a way that is economic, efficient and effective;

    —  the relevant notice and consultation requirements have been met;

    —  the consent of the Secretary of State has been obtained. The Secretary of State must satisfy himself that the above tests have been met and that it is "in the interests of the public" to approve the scheme.

  In Scotland the arrangements are slightly different. As yet there are no applications for Quality Contracts.

Annex A

Quality Contracts and Statutory Quality Partnerships

Quality Contracts under the Transport Act 2000

  1.  A Quality Contract provides full local authority control over bus services (routes, frequencies, fares) throughout the relevant area. This is done through competitively tendered contracts for up to five years. These are enforced by the local authority, as contracting entity; Traffic Commissioners no longer have a role.

  2.  This contrasts with the general position outside London, where local authorities may tender only for individual services that are socially necessary but not commercially viable, and where service details must be registered by operators with the Traffic Commissioners and where no control over fares may be exercised (either by local authorities or by Traffic Commissioners).

  3.  Quality Contracts schemes may only be made if:

    —  an authority is satisfied that the scheme is the only practicable way of implementing the policies set out in its bus strategy, and that the scheme will do so in a way that is economic, efficient and effective;

    —  the relevant notice and consultation requirements have been met;

    —  the consent of the Secretary of State has been obtained. The Secretary of State must satisfy himself that the above tests have been met and that it is "in the the interests of the public" to approve the scheme.

  4.  To date no proposals for Quality Contract schemes have been made although Coventry City Council is interested.

COMPARISIONS WITH THE SCOTTISH SYSTEM

  5.  In Scotland, devolved legislation applies (Transport (Scotland) Act 2001) which is similar in principle but differs in detail on criteria and timescale.

CRITERIA

  6.  Quality Contracts schemes in Scotland may only be made if:

    —  an authority is satisfied that the scheme is necessary for implementing its transport policies, and will do so in a way that is economic, efficient and effective;

    —  the relevant notice and consultation requirements have been met;

    —  the consent of the Scottish Ministers have been obtained. The Ministers must be satisfied that the above tests have been met and that it is "in the interests of the public" to approve the scheme.

  7.  The main distinction from the English legislation (see paragraph 3) is that the scheme must only be deemed "necessary" rather than "the only practical way". "Necessity is felt to be a significantly less stringent test to satisfy.

TIMESCALE

  8.  In both England and Scotland a scheme must be made within six months of its being approved by the Secretary of State (Scottish Ministers). Then, in England, the contract comes into effect 21 months after the scheme has been made. However, in Scotland, the contract comes into effect six months after it has been let.

  9.  The distinction between 21 months and six months is not quite so stark as it appears, since the period in England includes the time needed for inviting tenders, selecting a contractor and signing the contract, whereas the Scottish sixmonth period only starts once the contract has been signed. Best estimate is that a typical Quality Contract tendering process would take four months to complete (starting from the date when the scheme is made). Hence the additional time required in England after letting the contract would typically be 17 months, compared with six months in Scotland. This still leaves the Scottish process as being quicker by almost a year.

  10.  The 21 month period may be varied by Order (though sufficient time must be given for the tendering process and to allow incumbent operators other than the successful tenderer reasonable time to wind up their services within the Quality Contract area). Most other options for accelerating the process or relaxing the criteria would require primary legislation.

STATUTORY QUALITY PARTNERSHIPS

  11.  Although about 130 voluntary Quality Partnership schemes are in operation in England, there are to date no statutory schemes. A statuory scheme should give both parties greater confidence to invest, because it is enforceable. Failure by a bus operator to meet the agreed standards would be treated as a breach of his bus registration and would attract penalties from the Traffic Commissioners. There is a clear duty on the authority to provide the specified facilities while the scheme remains in operation (unless there are exceptional circumstances); failure to do so would be actionable in court. But in other respects it would operate like the existing voluntary schemes.

  12.  An authority or authorities can implement a quality partnership without Ministerial involvement if satisfied that the scheme will help implement the policies in its bus strategy (which forms part of its statutory local transport plan). There are requirements as to prior notification and consultation, including with bus operators and bus user interests.

  13.  As for Quality Contracts, there is legislation in Scotland on Quality Partnerships that is similar but not identical to that in England. In England the standards the local authority can specify cannot include requirements as to frequency or timing of services. In Scotland they may include requirements as to the minimum frequency of services. But they may not include requirements on timing or the maximum frequency of services.

  14.  Quality partnership schemes may not make provision about fares. They embrace both commercial and subsidised services and do not affect the general rules about tendering or registration.


 
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