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

Memorandum by Paul Kevill Esq (Bus 37)


  1.  The following describes some of the findings of a research project[4], that I am currently writing up as a PhD thesis under the supervision of Prof. John Hibbs at the University of Central England. I have combined this with some of my own general experiences of transport in local government, academia and consultancy in the hope that it will be of assistance to the Sub-Committee in its inquiry.


  2.  During the 1990s I was South Yorkshire Passenger Transport Executive's Business Analysis Manager. With some responsibility for strategic thinking, I was concerned about the contribution our organisation could make within the framework of the 1985 Act. Some officers repeatedly cited their lack of powers as reasons for lack of innovation and despite a continually expanding budget there were no corresponding increases in effectiveness that could be measured.

  3.  We therefore approached the public transport problem from the perspective of the conditions that would be necessary to make organisations such as PTEs or Council public transport departments superfluous. Bearing in mind that transport is not an end in itself, and what matters is access to the things that go to make up the quality of life, we concluded that the objective of public transport policy should be Sustainable, Equitable Access. As things stood, access was neither sustainable (tending to require increasing mobility and such mobility being increasingly frequently by car) nor equitable (there being a large and widening gap between the mobility poor and the mobility rich).

  4.  Without assuming the need for LA intervention, we then considered to what extent bus operators on their own could make access more sustainable and equitable. In common with many other areas, we observed that as well as the inherent weaknesses of public transport (such as the need for comparatively concentrated flows) and the external problems such as traffic congestion or unsympathetic land-use planning, the bus industry contrived to shoot itself in the foot with poor information, rude drivers, dirty buses, buses that didn't stop etc.

  5.  The central curiosity was then the fact that commercial organisations did not treat their customers as well as they could, and in fact spent considerably less on consumer research than the PTE. Whilst a good deal of academic work had been done on what had happened post-deregulation (such as comparisons between London and elsewhere) there was little evidence about why it had happened. A practical benefit of explanatory research would be to understand what lies behind what operators do, such that LA spending could be used to encourage market orientation rather than attempt to substitute for it.


  6.  By conducting in-depth interviews with bus company directors and senior managers, I hoped to understand their view of regulation, competition and—two of the most disappointing post-deregulation responses—pricing and passenger information. I also explored general attitudes to the concept of marketing. [5]

  7.  Responses were expected to shed light on the apparently inexplicable lack of marketing orientation to be found amongst many bus operators.

  8.  I interviewed 20 bus operators, representing urban (excluding London) and rural situations; ownership by large groups, independents and councils; long-established and new entrants. The fieldwork took place between 1997 and 1999 but despite several important developments in the past few years, the essential attitudes and problems persist. Below I refer to the findings as they relate to the Sub-Committee's items that they wish to consider.


  9.  The largest component of subsidy, concessionary fares, appears from my research to be a major distorting presence in the market. Operators were clear that without it, services would be less frequent and some would not be viable at all—thus showing that the condition of being "no worse or better off" has been flouted. The subsidy to the person is in effect leaking into general network subsidy, a process sometimes referred to euphemistically as "providing stability".

  10.  Operators were generally satisfied with arrangements for tendering for subsidised services, although several questioned the value for money of some of the services deemed socially necessary by councils.

  11.  Indirect subsidy, such as passenger facilities or information provided by local authorities produced mixed responses. Some of the more customer-orientated operators saw no logic in someone else being responsible for important parts of their service marketing mix. Several saw a degree of sense in shared facilities being provided by an authority but resented having to pay for them, especially where they had no input to standards or management. Attitudes appeared to depend on how good the local authority output was. Where it was satisfactory, operators were prepared to quietly accept the subsidy.


  12.  At the time of the fieldwork, these were beginning to take shape in a few of the respondents' areas and operators were generally enthusiastic about them. In particular they provided an opportunity to establish responsibilities between operator and authority. In all cases, relationships were better where it was clear who was expected to do what.

  13.  The question of quality contracts did not really arise at the time. However, the legitimacy of an authority to specify service quantity, quality or price must rest on their understanding of the consumer and an objective measurement of effectiveness. Whilst a good LA, following BV principles, can get closer to their customers than a poor, product-orientated bus company it is unlikely that they can do a better job than a market-orientated bus company. There is also the important difference that a commercial organisation provides service to earn revenue (so the more the better) whereas the public sector sees increases in service as an increase in costs. It also seems to be frequently forgotten how often producer convenience was prominent in LA-controlled services.


  14.  Arising from the discussion of who should do what, it was clear from the research that the majority of operators wanted to be "left to get on with it". However, they saw themselves in the unfortunate position of being unable to supply the most vital attribute of the service—reliability—and expected that the LA should deliver a clear road.

  15.  There was dissatisfaction with this in many areas, and operators believed that despite favourable local policies, councils at a highway engineering level were not really serious about re-allocation of road space and allowed what seemed to be trivial problems or the least amount of motorist opposition to veto the introduction of bus priority.

  16.  There is a strong case from the research that competition with private cars is a limiting factor on innovation and market segmentation. Because car users are able to externalise their costs (congestion, pollution, accidents, severance) the main advantages of public transport (efficient use of road space and natural resources) have no value in the market for travel. Worse still, what are in effect the car user's "waste products" contaminate the bus service by reducing reliability, which in other spheres of business would be grounds for redress.

  17.  The basic problem is then that bus services are arguably not "fit for purpose", to borrow a consumer protection term. Although the more market-orientated operators have learnt to listen to customers and improve quality and they recognise the potential for people being willing to pay more for a better service, there is only so far they can go with services that can not be absolutely relied upon. They are effectively barred from the upper end of the market by the relative cheapness and superior quality of car travel.

  18.  Road pricing of some sort would be a solution to the problem that road space is perceived as free and is therefore consumed until marginal benefit to the consumer is zero (ie it is wasted) but we can only speculate on the extent to which bus operators would exploit the higher price/quality segment.


  19.  Operators were broadly content with the regulations as they stood, and there was little evidence of an effect on market orientation. There was universal support for higher standards of entry to the industry. Traffic Commissioners and bus service registrations drew some criticism for being irrelevant.


  20.  Not a major feature of my research with operators, but I should like to draw the committee's attention to the work[6] commissioned by South Yorkshire PTE from TR&IN, with which I was involved. This drew on existing sources and original fieldwork to show that the transport system currently contributes to social exclusion in several ways.

  21.  In particular, whilst fiscal exclusion (in the bus industry context, high fares or having to pay twice when interchanging) is a major issue, it is probably less important than services which go to the places people need, at the times they need or even the existence of a service at all (temporal and spatial exclusion). The Government's emphasis on minimum concessions with narrow eligibility criteria, although understandable, may not be the most efficient way to reduce social exclusion.

  22.  It is unfortunate that local authorities are therefore committed to large sums in concessions reimbursement whilst at the same time tendered service budgets are under pressure. In order for bus services to contribute to social inclusion, local authorities must have quantitative measurements of accessibility (to facilities, not just bus routes) and a Best Value obligation to determine the allocation of resources to the different types of exclusion. The leakage of concessions subsidy means that the extent of the network may be greater than it otherwise would be, but a local authority has no control over where and when.

  23.  One might also question the paternalism implied by types of income support that specify on what services the benefit should be spent.


  24.  Part of my research with bus operators was concerned with cultures or paradigms ie "the way we do things here". The proponents of free markets assumed that a deregulated private sector would be more responsive to the consumer—they had to be, otherwise they would go out of business. What was surprising was not that public sector companies did not change overnight, or even the self-destructive territorial battles—these are common phenomena in liberalised markets—but the length of time it has taken for the consumer-satisfying paradigm to take hold.

  25.  After more than 15 years it becomes difficult to defend the bus industry against the charge that it will never change, but the lack of change can at least in part be attributed to local authority willingness to subsidise firms that would otherwise have struggled.

  26.  The key to progress would seem to be to identify the best bus operators and help them do what they do, and stop subsidising the dinosaurs, rather than widespread reversion to local authority specification and control.


  Paul Kevill began his transport career in 1977 in the road haulage industry, and following a BSc in Transport Operation and Planning has worked in academic research and local authorities. This included 15 years with Passenger Transport Executives in a research and strategic planning capacity, also serving on the CLIP Transport Statistics Group. He is now a freelance consultant and associate lecturer in transport research methods on Sheffield Hallam University's transport planning MA.

12 April 2002

4   Interim findings published: Kevill, P (2000). The effects of local authority intervention in local transport markets on bus operator paradigms, Proceedings of the UTSG Annual Conference, Liverpool 2000. Back

5   "Marketing" in this context means the management's orientation towards the customer as the primary reason for the business as well as the systematic treatment of the product or service through the "six Ps". Product, Price, Place, Promotion, People and Process. Back

6   Transport Research & Information Network (2001) Transport and Social Inclusion in South Yorkshire, South Yorkshire PTE, unpublished. Back

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