Memorandum by Stagecoach Group plc (Bus
THE BUS INDUSTRY
Stagecoach Group is one of the largest operators
of bus services in the UK, running a fleet of around 7,000 buses
and coaches across the country. Our business is committed to increasing
the number of people travelling by bus through targeted investment
and providing our customers with safe, easy-to-use, quality services,
offering value-for-money fares.
Stagecoach runs service networks stretching
from Devon to Inverness, connecting communities in small towns
and rural areas, as well as major urban centres such as Newcastle,
Manchester and London.
More than £120 million has been invested
by Stagecoach in new vehicles over the past three years as part
of its commitment to quality bus services. New buses are designed
to be fully accessible to elderly passengers, people with disabilities
and families with young children.
All new vehicles meet tough Euro III emissions
standards and ultra low sulphur diesel is used throughout the
fleet as we work hard to attract car users to take the "green"
alternative to congestion and polluted cities. The average age
of our fleet is seven years.
We recognise that simple, accessible information
is a key factor in encouraging people to travel by bus. Our dedicated
website, stagecoachbus.com, provides customers with key information
about our services, including timetables, ticketing and fares.
We are also rolling out our Guide to major centres, providing
a comprehensive explanation of our services and information about
those of other transport providers.
Stagecoach is a major employer, providing jobs
for 18,000 people at our 12 regional companies and 90 depots across
We note the terms of reference of this Inquiry
and welcome this opportunity to submit evidence to the Sub Committee.
1.1 Bus-related public spending in Great
Britain is amongst the lowest level of spending in the EU. In
2000-01, bus-related public spending amounted to £1.1 billion,
accounting for 32 per cent of total industry income. In some countries,
the level of bus subsidies is as high as 70 per cent. In the UK,
Fuel Duty Rebate accounts for some 32 per cent of the £1.1
billion, concessionary travel reimbursement makes up some 41 per
cent and payments for contracted services account for the remaining
27 per cent of this expenditure. Any support for the bus industry
is fully transparent, accountable and independently audited.
1.2 Currently, the industry receives a rebate
of 80 per cent of the tax paid on fuel consumed operating local
bus services. However, until 1994 it received 100 per cent rebate
and we would wish to see this reinstated. This would end what
is effectively a tax on bus usage and bring the bus industry into
line with the rail and airline industries. It would also mitigate
the impact of cost increases, reduce the pressure on bus fares,
provide an incentive for more people to travel by bus and contribute
to social inclusion. (See 1.4).
1.3 Concessionary travel payments are not
a subsidy to the bus industry. These schemes are a direct passenger
benefit. Payments are a reimbursement to bus operators on behalf
of passengers who have been granted discounted fares by their
Transport Authority. Because the regulations require that an operator
is no better or worse off as a result of the concession, this
does not represent a subsidy to the industry. In many instances,
the value of the concession to targeted groups has been reduced
in recent years as a result of a shortage of revenue funding available
to the Authorities concerned. Indeed, Local Authority funding
for concessionary schemes fell by 15 per cent in real terms in
the 10 years to 2000-01. Where concessionary fares have increased
there has been a marked reduction in passengers carried. While
it is a matter for central and local government to determine which
groups of passengers should receive concessions and to what value,
it would appear that granting of concessions to the unemployed,
those on low incomes and to children would aid social inclusion.
1.4 Contracted services are specified by
Local Authorities and are the subject of competitive tender. In
this regard, they are similar to any other product or service
the Local Authority determines to procure. The increased prices
of such contracts over recent years reflect the increased costs
that bus operators have been facing, particularly insurance, labour
and fuel costs. However, Local Authority expenditure on concessionary
travel and contracted services combined is now over 50 per cent
lower in real terms than it was in 1985.
1.5 We welcome Rural and Urban Bus Challenge
schemes, which should point to new and better value ways of providing
public transport in areas where conventional bus services are
no longer appropriate. However, if these are to be of maximum
benefit they will need to be carefully monitored and any resulting
best practice must be widely disseminated.
2. THE RELATIVE
2.1 Delivering better public transport has
to be a partnership between Government, Local Authorities, bus
operatorsand local transport users. We fully support the
creation of Quality Partnerships in which operators and Authorities
each agree to invest in improving bus services. Local Authorities
can deliver bus priority measures and effective enforcement as
well as other improvements to the bus infrastructure, whilst the
bus operators invest in low-floor, low-emission buses and improved
ticketing and information facilities. By working together, we
can significantly enhance the overall experience for our customers.
2.2 Where we have been able to develop strong
and effective partnerships we have achieved significant increases
in the number of people choosing to travel by bus. For example:
In Cambridge, where Stagecoach has
invested £4.5 million in new vehicles, there has been 20
per cent patronage growth in less than six months.
In the Blackwater Valley, there has
been a 15 per cent increase in the volume of bus passengers over
a similar six-month period as a result of a partnership between
Stagecoach and a number of Local Authorities.
In Oxford there has been a sustained
5 per cent per annum patronage increase, year after year.
In Portsmouth a 25 per cent passenger
increase has been recorded on the Leigh Park corridor in 15 months.
Interurban partnerships have also
delivered growth of 35 per cent on the BrackleyBanbury
corridor and 15 per cent on the NuneatonCoventry corridor.
In Scotland, our award-winning partnership
with Fife Council to operate the Ferrytoll park and ride scheme
is regularly taking more than 400 cars a day off the roads since
its launch 18 months ago, and demand for spaces will soon reach
the full 500-car capacity.
2.3 The Transport Act 2000 enables Authorities
to introduce statutory Quality Partnerships in which they can
specify minimum vehicle standards and which require all parties
to commit to their various obligations. These give certainty to
everyone and it is disappointing that no Authority has yet sought
to introduce one.
2.4 By contrast Quality Contracts, which
involve the letting of exclusive contracts for the provision of
bus services, do not need to include any provisions for the enhancement
of the bus-operating infrastructure. They would also break the
current direct link between operators and their customers. In
such situations there is no guarantee of any passenger benefits
and every prospect of an increased cost to the public purse. The
contracting process alone is estimated to cost between £40
million and £70 million per annum and a further 50 per cent
of that would be incurred in operator bid costs, which would be
reflected in tender prices. Many Authorities have identified this
potential increased cost, and they therefore see them as a last
resort. This is what the Transport Act 2000 envisages.
2.5 Regulatory change will not alter the
economics of the bus industry. However, it will create further
uncertainty, which will undoubtedly impact on investment. Quality
Partnerships are in their early stages. In the relatively short
time since the Transport Act 2000, our experience is that they
are delivering real growth in areas where we can work together
with forward-looking Local Authorities.
3. THE IMPORTANCE
3.1 Stagecoach market research shows that
customers and potential customers regard service reliability and
punctuality as the single most important determinant of whether
or not they will use a bus service. This is of far more fundamental
significance than any debate around the relative merits of bus
quality partnerships and quality contracts. If we are unable to
deliver reliable and punctual services, there will be no prospect
of either retaining existing passengers or attracting new ones.
Making the buses run on time, like making the trains run on time,
requires dedicated effort from both the operators and the track
authorities. Traffic congestion is unpredictably variable from
one day to the next, making good timetabling without priority
measures and consequently service reliability, impossible to deliver.
In turn, this inevitably affects customer confidence in the bus
as a transport mode of choice.
3.2 Bus lanes not only add more certainty
to the bus journey time but they speed passengers' journeys and
reduce bus operating costs. Less tangible benefits are derived
from raising the status of the bus with passengers and the community
at large and of bus driving as a career. Bus lanes are also good
for social inclusion, if it is accepted that bus passengers are
more likely to be socially excluded than motorists.
3.3 Once provided, it is vital bus lanes
are enforced. A single vehicle parked in a bus lane will negate
the benefit for the duration of the offence. Perhaps understandably,
enforcement is invariably not high on Police agendas and this
can be a major problem. For example, in Manchester the benefits
of the A6 Quality Bus Corridor, which is currently being created,
are not being realised because of persistent illegal parking in
the Longsight district centre by as many as 20 cars at a time.
Illegal parking at bus stops can also cause genuine distress to
passengers with disabilities who have boarded a low floor bus
only to find that they cannot alight easily because the bus has
been unable to pull into the kerb at their stop.
3.4 Unfortunately, in many areas traffic
congestion continues to increase. This means that bus operators
have to continually review services just to maintain reliability.
The failure to introduce bus lanes increases bus operating costs
as operators are forced to introduce more vehicles to services
in order to maintain reliability in the face of increasing traffic
congestion. In the Manchester area alone, Stagecoach has introduced
60 extra buses in the past three years to combat the effects of
congestion and overall operating speeds have reduced by 8 per
cent in the past 12 months. These requirements for increased resources
merely serve to accelerate cost inflation in the bus industry.
3.5 Some traffic delay hot spots can be
eliminated without recourse to bus lanes simply by re-phasing
traffic lights or by installing transponders on buses which activate
the signals when they are detected. However, many Highway Authorities
are not resourced sufficiently to address these problems quickly.
3.6 Highway Authorities have a key role
to play in delivering bus priority, controlling road works and
in their parking management policies, all of which have a major
impact on the speed and quality of bus service provision. In Metropolitan
areas, where traffic problems are often at their worst and highways
and transport responsibilities are split, we would advocate the
creation of a Traffic Director, following the London model, with
the specific responsibility and powers to ensure the efficient
movement of traffic in general and buses in particular. Such an
appointment would speed up implementation of the measures necessary
to deliver bus service speed and reliability.
4.1 The bus industry already operates in
a highly regulated environment. It is subject to all of the usual
regulations affecting business, including the requirements of
the Health and Safety Executive. Additionally, the Traffic Commissioners
and the Vehicle Inspectorate are responsible for ensuring that
the industry meets quality standards. They ensure that drivers'
hours regulations are not breached and they have been applying
progressively higher standards to vehicle maintenance and service
timetable adherence, all policies that we endorse in principle.
4.2 Our top priority is improving even further
the punctuality and reliability of our services and we fully support
the setting of targets. However, we are concerned that traffic
congestion and an absence of effective bus priority and enforcement
is making the Traffic Commissioners' newly published standard
for bus service punctuality (95 per cent of buses within one minute
early and five minutes late of schedule) unachievable in some
areas. It is a more rigorous standard than ever achieved by the
railway industry, and buses do not have the benefit of restricted
access to their track. Instead, we would prefer to see local performance
standards agreed with the highway authority for each service,
to which both bus operators and highway authorities would be accountable
to the Traffic Commissioner. As more priorities and other measures
were put in place, we would expect the standard to be progressively
4.3 The industry does not have an economic
regulator, as it is not a monopoly supplier. Instead it is subject
to the jurisdiction of the Office of Fair Trading using its powers
under the Competition Act 1988. These include substantial penalties
for both anti-competitive agreements and also abuse of a dominant
position. The Enterprise Bill, if enacted, strengthens OFT powers
4.4 The introduction of an additional economic
regulator for the industry is unnecessary given the existing jurisdiction
of OFT and the competition buses face from the private car and
increasingly from taxis. It would be expensive to provide and
would inevitably have to be paid for by the industry's customersits
5. THE CONTRIBUTION
5.1 Bus services make a major contribution
to reducing social exclusion. Social inclusion is as much about
accessibility to bus services for people on low incomes in urban
centres and small towns as it is for people living in rural areas.
Buses are used three times as much by households without cars
as by those with them and people in the lowest income range use
buses twice as much as people in the highest fifth.
5.2 Measures that give priority to buses,
thereby improving their reliability and speed, therefore enhance
5.3 Surveys of transport social exclusion
show that the greatest social exclusion occurs for shopping journeys,
where people no longer have access to local shops and where they
do not have a car available to reach their nearest superstore.
5.4 In urban areas the lowest car ownership
corresponds with the most frequent bus services and improving
the quality of these services is an effective way of minimising
5.5 In rural areas where demand for public
transport is more limited, we believe that demand responsive services,
particularly if they can be integrated with a trunk bus service,
may provide the most cost-effective way of reducing social exclusion.