The Three Rs

2009. How will we cope? We’ll see Regulation, Part 2: Reform and Part 1: Recession...

Part 2. Reform

Bus service operators’ grant, also for the juvenilely-challenged known as fuel duty rebate, pays out over £400mil per annum direct to bus operators. It’s said to be worth about 9p per passenger carried. Taking off BSOG and VAT means a gallon of diesel is currently costing about £2.70 (the average Bournemouth forecourt price or motorists is currently £4.47). If you run an eligible bus service, you have the right to claim FDR.

Ruth Kelly instigated a review because she thought BSOG was “poorly targeted”. In a sense, she was right. Why should the government dole out millions to operators without proper targets or incentives? So, 2009 is the year that BSOG may well be reformed, following a consultation last year. We say “may well” because next week the Big Five will warn new transport secretary Hoon that BSOG changes may drive up fares or lead to withdrawn mileage.

One option is to link BSOG with fuel efficiency and low carbon buses, especially the uptake of hybrids. While this might hasten the production of reliable hybrids, the technology isn’t proven yet and is still over complicated for mass adoption. In any case, buses account for a very modest emissions total especially emissions per passenger.

Another is that BSOG could be linked to increasing passenger numbers. Commercial operators already have a great incentive to do this—it’s good for the bottom line! Concentrating resources where growth is most likely might (will?) further weaken socially necessary services to the point that, for example, deep rural routes become inoperable. To counter this, there’s talk of some sort of rural safety net. But this is unlikely to address marginal urban buses that operators might abandon in favour of those likely to grow.

There’s more to this debate. Should, for example, BSOG:

• Be administered by transport authorities?
• Pass to authorities under quality contract agreements?
• Be capped or tiered?
• Be available to taxis on demand responsive type services?
• Be linked to punctuality?
• Reward the use of smartcards?
• Form part of a wider policy agenda—e.g. services tackling social inclusion?
• Only be paid under quality contracts or partnerships?
  

Noting the Big Five's concerns above, operators are up for the debate, certainly, but within reason. So long as the end result doesn’t hurt too much. Perhaps a change of heart by rebating the forthcoming April 2p duty rise may help oil the wheels.