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

Memorandum by the Transport and General Workers' Union (Bus 13)


  1.  The Transport and General Workers' Union as the largest trade union in the bus industry representing over 82,500 people working in the industry, welcomes the opportunity to contribute to the inquiry into the bus industry by the Transport Sub-Committee.

Subsidies in the United Kingdom bus industry, and the result of "bus challenge" initiative in rural and urban communities

  2.  Public transport support, also known as "revenue support", covers all forms of local authority current expenditure on public transport, other than concessionary fare reimbursement. At 2000-01 prices public transport support for local bus services by area outside of London has decreased £378 million in 1987-88 to £282 million in 1999-2000. This represents a decrease of 39 per cent during this period. These figures include the new Rural Bus Subsidy Grant and Rural Bus Challenge from 1998-89. Subsidies reach their lowest level in 1997-98, but since then they have increased 20 per cent by 1999-2000.

  3.  During the same period the local bus services fare index for outside London increased by 18.2 per cent from 91.0 to 107.6. Between 1987-88 and 1999-2000 there has been a 27.2 per cent decline in bus patronage outside of London. According to Bus Industry Monitor 2001: 28 there is a 0.3 per cent change in bus patronage for every 1.0 per cent change in real term fares. The increase in the fare index explains 5.46 per cent of the decline in bus patronage since 1987-88. Due to the small numbers involved it is not possible to do a correlation analysis but there would appear to be a clear relationship between the decline in the level of subsidies and the reduction in patronage. It should be noted that only changes in economic activity has a greater influence on demand for public transport, which is 0.36 per cent.

  4.  The current Government introduced the Rural Bus Subsidy Grant (RBSG) in 1998 due to concerns about the level and quality of public services in rural areas. Originally, it could only be used to subsidise new or improved services, to/from settlements less than 10,000. We understand that, so far, the RBSG has provided 1,800 new or enhanced services, with additional passenger numbers rising from 10 million in 1998-99 to 16 million in 1999-2000.

  5.  The Government relaxation of the eligibility criteria of the RBSG including new services in and around market towns and to continue support from existing bus services—was welcomed by us. However, the second change may open the scheme to possible exploitation by bus operators.

  6.  Local authorities tend to support unremunerative services to support policy objectives such as social inclusion. The TAS review for the DTLR on tendering practices of local authorities confirmed that over 90 per cent use semi commercial criteria—such as cost to fares ratio or numbers of passengers—rather than any "needs" based criteria. Most authorities see secured services as a means of supporting the weakest links of an overall network.

  7.  We reject the argument that quality contracts would be more bureaucratic than the current system. Passenger Transport Authorities are currently fully occupied in a complex but fragmented competitive tendering system, and struggling to develop effective quality partnership agreements. Most of this considerable effort is failing to deliver a co-ordinated development of public transport. In contrast quality contracts would enable PTAs to have a comprehensive and co-ordinated control which if properly implemented would provide a better regulated and integrated system, that would maximise the benefits to passengers and the community as a whole. "There is enough evidence though to indicate that fragmentation under tendering damages the market." (TAS 2001:31).

The relative merits of bus quality partnerships and bus quality contracts

  8.  Whilst the T&G supports local authority input into local public transport, we are concerned about the value for money likely to be obtained from Quality Partnerships and the Audit Commission shares this view.

  9.  The Audit Commission have found that local authorities invest far more in Quality Partnerships than bus operators give back in return.

  10.  Amongst the Audit Commission's specific conclusions were:

  Councils and PTEs generally contribute between £150,000 and £200,000 against a typical investment from bus companies of only £25,000 to £40,000. In many cases, the Audit Commission found that operators did no more than agree to purchase new buses, which they might have purchased in any event.

  We wholeheartedly support the introduction of quality contracts and the Government should encourage a much wider application of this concept, which has been particularly successful and proven in practice in other European countries such as France. Quality contracts should not be restricted to a few areas where quality partnerships do not work. We welcome the slightly stronger powers introduced in Scotland to ease the move to a Quality Contract regime and would like to see similar powers introduced into England and Wales. These contracts should include an element of cross subsidy from profitable parts of the route, to unprofitable parts of the route. This would reduce the overall cost of the quality contract to the relevant authority. This type of contracting is successfully used in Sweden.

  11.  We believe that quality contracts would bring the following advantages:

    —  stability of the network;

    —  local authority control over fares;

    —  the ability to specify the quality and quantity of services and connections with other buses or other modes;

    —  the benefits of cross subsidy.

  12.  An important element in ensuring that these quality contracts are successful is to ensure that they are based on modern minimum employment standards that are family friendly, and do not require employees to work excessive hours. We believe that unless the earnings issue—real wages have declined since the industry was deregulated—is addressed, it will not be possible to have the stable and professional workforce needed for the provision of quality bus services.

  13.  Since deregulation and privatisation, privately owned operators make decisions based purely on commercial considerations [lowest cost] and not on the needs of their employees and the wider requirements of the community. For example, service frequencies at off peak times are often much reduced or non-existent, as commercial considerations dictate that they are not profit making, increasing social exclusion. Any incentive to innovate on the part of bus operators is based purely on whether it will create a profit or not. The framework under which the rail industry was privatised recognised that private operators should not have complete freedom to decide when and where they will operate services. The same arguments apply equally to bus operators. Modern employment practices and social responsibility are just as important as the profit motive in today's bus industry.

The importance of bus priority measures and their enforcement

  14.  The UK's love affair with the car has resulted in the almost unimpeded conditions for car traffic in our towns and cities. It is only now that we are seeing attempts to reclaim passenger rights-of-ways. Bus priority measures are an attempt to speed up one mode of public transport, but they deal with one aspect of the slow speed of buses, traffic congestion. Journey times and frequencies are an important factor in determining what mode of transport is chosen. The greater the perceived frequency of service the greater the likelihood of using that service.

  15.  The almost universal use of one-person-operated buses has had a considerable contribution to congestion due to slowed down pickup times. It is interesting to note that some of the architects of the 1984 Buses White Paper were opposed to the introduction of these buses—especially in urban areas—for this very reason. They have been introduced for profit reasons and not service considerations.

  16.  In terms of output achievement of passengers, each £ of local authority spending on traffic priority and infrastructure upgrading appears to achieve three times as much as each £ spent on service subsidy, but this is based on moving people onto buses. Rising passengers are part of a virtuous circle, of increasing schedules in order to extend the network, and therefore make buses more attractive. But this has to be a long-term and consistent policy if it is going to work.

  17.  If bus priority schemes are to be effective then the enforcement of the schemes is crucial. This raises questions how and who is going to enforce them. If enforcement is perceived to be weak then they are unlikely to be successful. Ultimately this raises the question of funding for whatever system(s) are used to enforce the scheme. It is unlikely that the police would want to have much involvement in the enforcement of such schemes. Therefore it is likely to be either a local authority or PTE responsibility. Unless buses are physically separated from cars then there is a strong likelihood that cars or commercial vehicles will use or park in these lanes. It would be impossible to personally police such corridors; therefore we believe that the only workable solution to enforcement would be closed circuit television. We are aware that these systems are costly but the price could be included into the costing for the scheme, with the local authority or PTE allowed to keep the revenue from the fine income. The T&G would like to see better enforcement of bus lanes including higher fines for offenders. All too often, bus lanes have become political footballs between the private motorist and traders on one side and the provision of more attractive public transport by local authorities and PTA on the other.

  18.  Consideration should also be given to extending the use of contraflow bus lanes along with bus only streets and other traffic measures.

  19.  The approach to the enforcement of basic traffic regulations is too lax, for example, the practice whereby defective speedometers are allowed on buses in operation for periods extending into weeks or even months in some parts of the country. Dispensation for bus operators who have faulty speedometers who have ordered parts should not be given by Traffic Commissioners.

  20.  The society we live in is one based on convenience and of high car availability. Over 90 per cent of all UK journeys are made on a "car available" basis, and the bus will never again supersede cars as the primary mode of transport. However, unless the image of the bus is to change from that of transport of last resort then the issues surrounding bus priority measures and their enforcement will have to be addressed.

Regulation of the bus industry

  21.  Regulation of the bus industry outside of London has been partly responsible for the 18 per cent overall decline in local bus service journeys since 1987-88. Since 1987 there has been no quantity regulation, except for notice of starting or ending a service. In London a tendering process gives an exclusive right, is granted for a fixed period, and is awarded following competition between operators.

  22.  The main reason for the poor attractiveness of deregulated services seems to be that without exclusive rights in public ownership, service patterns are unstable and levels of integration are low. Studies of the UK bus market immediately before and after deregulation show that the change of regime was followed by a sharp decline in ridership, a 33 per cent decline in the English metropolitan areas from 1987-88 to 2000-01. These studies concluded that this decline cannot be fully explained by changes in fares, service levels, car ownership or unemployment. Instability and loss of integration were key factors.

  23.  In London, with its tendering system, this has produced a system based on exclusive rights with private ownership. London route tendering is perceived to be a secretive and discredited system leading to contracts being awarded to companies of questionable character that had no staff or buses let alone a garage! Competing companies have undercut each other so severely that they have introduced multi-tiered pay rates with different rates for each route according to the value of the contract, with disastrous effect on staff retention and therefore service reliability.

  24.  Outside London, competitive tendering for uneconomic services evening and Sundays has prevented economically and socially justifiable cross-subsidy. Meanwhile, low cost operators have won contracts to run the service (different to the day time operator) leading to lower standards, weekly tickets and return tickets not valid on daytime operator's buses etc.

  25.  The ownership pattern in the UK is different from continental Europe, where in a number of cases the companies providing the services are still publicly owned and operate in closed markets. This type of ownership and market type—which we agree with—has contributed to more through ticketing in continental Europe than the UK, where mainly private ownership can hinder the establishment of through ticketing. Unless there was a monopoly supplier of public transport in that area. If there is to be a monopoly supplier then it is better that it is publicly owned.

  26.  We believe that society needs a higher level of service than the free market will provide and this can only be achieved through public ownership. Comparing the service provision of the UK publicly owned local bus companies with the big four national UK private companies, we believe it shows that the "public service" ethos matches more precisely the needs of the consumer, rather than the "financial market" driven provision of the private companies. The municipal companies seek an average rate of return on capital employed of 6 per cent while the privately owned groups require a 16 per cent return.

The contribution of bus services to reducing social exclusion

  27.  It could be argued that the current Government's policy has been more about "modal shift"—getting people out of cars and on to buses—than about providing better bus services to people without cars, and generally promoting social inclusion.

  28.  Also, according to research by the Joseph Rowntree Foundation, transport is not a primary preoccupation of many low-income groups and the role of transport in enhancing or eroding their quality of life is often unrecognised by them.

  29.  The availability of bus services is patchy, most larger urban areas have a reasonable service level on many main routes during normal work and shopping hours—Monday to Saturday 6am-7pm. But outside the core hours, service levels in most towns and cities do not generally match the services available in comparable areas and hours in London. Bus services in rural areas are considered to be virtually non-existent. As a result of this, in many areas, people don't choose to use buses, resulting in a spiral of decline and of sheer unfamiliarity with buses. Buses have become a product used only by those without choice and measures to give their priority meet resistance from people who can never imaging themselves using them.

  30.  But at the same time access to reliable and affordable transport has become more important for those seeking work. The growing tendency of jobs to be located on the edge of towns in large retail units, industrial estates or business parks has exacerbated transport problems.

  31.  Also employers in rural areas are increasingly wary about recruiting people without reliable independent transport. They believe that those dependent on public transport are less reliable employees and they are often unwilling to be flexible around starting and finishing times in order to accommodate bus timetables.

  32.  In reality public transport is unlikely to be a viable option for some people, no matter how low their income is. In these instances they will forego other basic amenities in order to maintain their car ownership and use. According to the National Travel Survey: 1998-2000 Update page 8, only 16 per cent of all rural area households have no car, compared with 36 per cent for Greater London and the Metropolitan built up areas.

  33.  Improving safety on buses for both passengers and staff will help with social inclusion. It is the fear of crime that excludes many of our citizens from using all forms of public transport. Even if only one part of the journey is perceived as being dangerous, either the whole journey will be abandoned, or it will be made by car.

  34.  We agree with the Joseph Rowntree Foundation that until social equity evaluation becomes a feature of central and local government planning, policy and provision, it is unlikely that the problems of disadvantaged individuals, groups and communities will be understood or addressed.

  35.  In the short-term to improve social inclusion there needs to be a high quality bus service that can provide access to people, goods and services for those without access to a car who would be economically better off without a car. To meet these objectives, buses have to be accessible, and this means that bus stops have to be within easy reach of the communities they serve, and that the fares are affordable by those on low incomes.


  We believe that there is positive future for the bus within our society and that it has an important role in the Government's 10 Year Transport Plan. It also has an import role to play an increasing social inclusion. The main points of our submission are:

    —  The support given to increase patronage of buses through subsidies should be increased.

    —  We would prefer to see quality contracts introduced, rather than quality partnerships.

    —  That more bus priority measures are introduced, especially CCTV to monitor bus lanes.

    —  The current regulator regimes—especially tendering—and structure of the industry should be replaced with publicly owned and accountable companies. In this new structure, quality contracts should be introduced to ensure the quality and service provision. These contracts should be based on modern minimum labour practices and family friendly policies.

    —  Action is needed to improve access to the bus network; this can come from more reliable services and introducing services into areas not covered by existing services.

April 2002

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