It looks a bit like how I might imagine parts of the Competition Commission’s market inquiry to be, when they’ve concluded and eventually published in 2012. Except it’s a report by the Local Government Association out this month.
The report’s front page features that old chestnut, the Routemaster, the image that the industry just can’t shake off. In fact, there are two of them. Within, there’s even a picture of a Metrobus Mk 2. Nothing cutting edge and perhaps they are trying to make a point. At least the third and final image of is a SLF, albeit a W-reg ALX400.
The LGA report points to out of control subsidies accounting for 60 per cent of turnover, plus no local control of the service itself… yet passenger growth is static. What to do?
“Any attempt to control increases in spending on bus subsidy must go hand-in hand with system change” is one very interesting sentence. Let’s remember the underlying reason behind that mid-1980s “system change” from regulation to deregulation. At the time, controlling subsidy was the very motive for the Transport Act 1985. And rather successful it was, too, at the time. So, do we have a case of what comes around goes around?
It’s rather difficult to dismiss the logic in the report. If you accept that free travel is a subsidy (actually, it isn’t), then by rolling all the various financial assistance that make up the 60 per cent of turnover into one and giving local control under an agreement may seem sensible. At least that way, we’d have no fear of BSOG payments per passenger that might threaten rural networks.
People ask the question, why are bus services such emotive subjects in the local media when compared, say, to the railway or to other service industries. One answer is that trains operate on a closed, regulated system and are strategic not local in nature. Buses are the very fabric of an area, a natural monopoly and there’s a more intimate relationship between the bus service and its local people.
But the main answer is that even after 24 years of deregulation & privatisation, the bus service is still viewed as a public asset. There’s been a link between local control and operations ever since municipalities bought out the trams. Concessionary travel started as a way of ensuring trams (and later motor buses) filled off-peak capacity, while givig a guaranteed income. Some rural bus routes were subsidised as long ago as 1968, whole networks from 1974 and most people even today still believe their bus service is local transport authority driven. Little wonder, then, that the report calls for increasing control wrested from operators and given to local people trough their LTAs.
i LGA report
Wednesday, 29 September 2010
Prediction
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14 comments:
Typical local government thinking.... it's all very well wanting control but what will happen in these cash-constrined times when the money doesn't stretch as it inevitably won't? It'll be the LA that takes the flack and has to make the difficult decisions on what to cut back, where and by how much etc. At the moment they can simply blame 'the big bad private bus company and its shareholders'. I fail to see what magic wands a local authority can bring to the party over and above the tools that the bus companies are already using - the money just won't be there.... these people just aren't in the real world.
They don't want a magic wand, they just want political control over bus routes, and in turn to ration bus provision. It means lower frequencies and falling passenger numbers on successful corridors, and more empty buses running nearly empty through estates where nearly all have a car, and through rural lanes.
There are still some fools who consider that modal shift can be delivered by the bus and that it has a future.
Then they visit a bus station and see the absolute drivel that is currently being delivered by the industry.
So they write a report and nothing gets done.
If public subsidy is being paid, it *should* be under public control. I strongly support removing BSOG and replacing it with targeted subsidy on that basis.
"There are still some fools who consider that modal shift can be delivered by the bus and that it has a future."
It can, if it is operated properly and used for the right things. This rarely occurs in the UK. Go and look at German and Dutch bus operations for how it should be.
The "Free Market" certainly isn't delivering competent services here in Derbyshire: two-hourly buses subsidised by BSOG which leave 1 min before the hourly train arrives: the operator measures foregone farebox income and decides it isn't worth the fuss. Meanwhile the lost public benefit is considerable.
To the extent that public subsidy is to fund services, the public might reasonably expect that strenuous efforts be made to secure the full public benefit of reliable and time-efficient journeys - and it looks as if it is going to need someone other than a revenue-maximising operator to do this.
'Targeted subsidy' - the argument that the passengers (be they fare payers or elderly/disabled people who have their fares paid for them) are the best target-ers.
The argument is not that the current method is perfect - but that (admittedly, supply and not price-based with all the distortions that causes) market competition is better than other methods for allocating bus services. See: the collapse of communism. Unless bus services are signficantly different from other types of goods...*
*What, there's no bus to the new retail park? But you don't need to go there, do you?
Are they including London's vast subsidy within that 60%? Provincial operators will point out that they have to make do with rather less LA & central government cash than TfL.
Let's have a look at local government running things like bus companies after Oct 20th. How many readers think their local council could run a profitable bus company just when most of their services are/will be put out to private contractors.
Bring back half fares for OAPs...simples ! Instant cash flow without stupid formulas and waiting months to be paid the money !
Paul, yes they are including London. The graph of fares also doesn't specify if it allows for the fact many now travel free. My guess is it doesn't, making the inclusion of the rebate in the subsidy figure questionable to say the least...
The concessionary travel scheme alone eats up a similar amount of funding to entire spending 10 years ago, so I cannot see how a significant saving can be made without restricting it, which the report does not support.
There is no political possibility of scrapping free travel for OAPs. See it is as a pension supplement skewed in a certain way.
As regards BSOG, it is a not-particularly-distortive way (compared to most others) of subsidising buses. It unambiguously reduces the cost of bus operation, therefore increasing the number of bus services and cutting the fares paid (including those paid in some sense by travel concession authorities). There are three possible problems with this:
1) that it is too expensive (for the Department for Transport). This is easily solved, but there will be fewer buses and higher fares as a result. [Expect this to be weighted in favour of fares to increase the cost to LAs on commercial services; except fewer LA supported services too]
2) that it incentivises fuel consumption which is bad for the environment ~ doesn't suitably reward low emission vehicles. It is tricky, but no doubt possible to subsidise buses in some other way that doesn't distort the natural state that would result otherwise - some other mechanism to reduce the cost of bus operation.
3) that (as per Chester-Blacon; Oxford; London) we don't want so many buses e.g. because streets are too busy. Tricky one to apply in a way that doesn't bugger things up elsewhere. In Chester there a fewer buses with more people on (I.e. buses are more profitable) and the same is likely in Oxford. Reducing BSOG would have similar reductive effects but would mean the 'profit' going (not being spent by) the Government, which could be used to target buses in some other way. But can we really justify less frequent buses in our towns to maintain them in the countryside?
A Cumbrian said...
"...except fewer LA supported services too]"
Presumably, you mean "...expect fewer LA supported services..."?
"'Targeted subsidy' - the argument that the passengers (be they fare payers or elderly/disabled people who have their fares paid for them) are the best target-ers."
Except that they're not. They target the subsidy on the most profitable services, when where it needs to go is the *least* profitable but socially necessary ones.
Were it not for this, bus companies might have to make do with a lower profit percentage. If that is the case, tough.
It's also the case that what more people want isn't necessarily what is needed. For instance, if you have a good, high capacity rapid transport rail system, clogging up the city centre is just poor transport planning. Running buses to the transport nodes is far more sensible. Look at how efficient a people-mover transport *systems* like those found in Germany are. But they'd never happen commercially where buses and trains are run by different companies, as each wants to take a complete journey fare.
Neil
To expand slightly on my comment:
"But they'd never happen commercially where buses and trains are run by different companies, as each wants to take a complete journey fare."
It was this situation following deregulation that meant the Newcastle Metro never quite met expectations. Hamburg has a handful of bus routes that penetrate the city centre despite being not far off the size of London.
London has other reasons for needing city centre buses (the rail system is full), of course - but Newcastle does not. There needn't be more than 5-10 routes going anywhere near the city centre there. Same with Liverpool - Merseyrail is an underused asset, even though bus-rail connections are done better there than in most other PTE areas. And Manchester has a seriously underused urban rail system, a few overcrowded trams in the wrong places, and *far* too many buses taking unnecessarily long journey times to the city centre.
Is it too much to ask to just get this right? And the only way it can be got right is by controlling what runs.
Neil said...
"Hamburg has a handful of bus routes that penetrate the city centre despite being not far off the size of London."
Hamburg has 1.77 million inhabitants; while London has 7.5 million, so your statement seems a little curious.
Your comments about German transport systems are perhaps reasonable in respect of urban areas, but in country areas the situation is often rather different. For example, if I want to get to a town about 18km north west of my home by public transport, the only possibility is by using at least two trains on a journey that involves going around two sides of a triangle (actually, due to the indirect route of one of the lines, it is more like three sides of a rectangle), and the journey time is generally around 1 hour. In a car, it takes 15 to 20 minutes, and you could cycle just as quickly as the train. There are simply very few interurban or orbital bus routes - rationalisation sounds good in theory, but the result is often that there is simply no attractive public transport option. The grass always looks greener from the other side!
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