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

Memorandum by North Hertfordshire District Council (Bus 06)



  1.1  This submission is made on behalf of North Hertfordshire District Council. It is solely focused on the role of subsidy in the bus industry but has implications for all other aspects being considered by the Sub-Committee.

  1.2  The Council is not the Passenger Transport Authority in the district but contributes up to 25 per cent funding towards bus services contracted to Hertfordshire County Council.

  1.3  The above arrangement has now been in place since 1987. The Council is increasingly concerned about the growing financial burden on it, arising from increased withdrawals and changes made to commercially run services and growing concessionary fares reimbursement. This current trend is not financially sustainable from the Council's perspective.

  1.4  The bus network in North Hertfordshire has very little genuine "competition" as intended by deregulation and, as such, this is unlikely to deliver genuine quality of service to customers.

  1.5  In the Council's view the commercial operators in the district operate on the basis of managing decline and keeping costs down. This is in considerable contrast to the rail industry, which (despite recent setbacks) continues to plan for growth.

  1.6  In addition the Council considers that, in a semi-rural district with no town larger than 30,000 population, the bus offers the most realistic means of encouraging large numbers of people out of their cars for local journeys.

  1.7  The Council is concerned that the current trends for bus service provision are unlikely to result in modal shift and do not adequately address social exclusion issues.


  2.1  The Council has a 15-year history of subsidising non-viable bus services in the district in partnership with Hertfordshire County Council. Attached at Appendix A is a summary of the annual contributions made by the Council. This represents approximately one quarter of the cost of providing contracted bus services (excluding school services) in the district.

  2.2  As the figures in Appendix A show, the Council's financial contribution towards bus contracts has almost doubled since 1994-95. This corresponds with a decline in commercially viable services within the district.

  2.3  Hertfordshire County Council's recently published draft Bus Strategy suggests that local bus operators receive the majority of income via "subsidy" from local authorities. In particular this falls into two specific areas, concessionary fares and contracts.

  2.4  The operators' reliance on concessionary income is demonstrated every year during the annual negotiations between authorities and operators. Each year operators make it clear that without satisfactory reimbursement the service will decline. Local authorities are forced to decide between reimbursing operators to effectively support the continued network and the annual requirement to reduce costs.

  2.5  The Council currently pays operators £280,000 for its elderly and disabled concessions. The increase in contracted services effectively means that the Council is subsidising operators twice on many services (via contract and concession).

  2.6  A key indicator of the declining commercial nature of the bus industry in the district is the key policy aim of Hertfordshire's Bus Strategy, namely to stabilise the bus industry. This further underlines the inability of a commercial industry to deliver services that will achieve the Government's Ten Year Plan target.

  2.7  This Council's view is that the situation is likely to decline further with more commercial withdrawals and, with the equality of retirement age for concessions, an increased financial burden on the authority.

  2.8  The conclusions to be drawn from the above are as follows:

    —  The Government must be aware of the increasing financial burden being placed on District Councils and ensure that sufficient financial resources are available to this Council each year.

    —  Looking to the long term, the Government should consider providing more powers and resources to Local Authorities to actively deliver the bus network in districts which are not currently "good bus territory".

Simon Young

Transport Policy Officer

12 April 2002

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