Wintry Outlook

A very wintry week to come in England, what with more snow and all. Frost even in the south, even here on the coast. On Wednesday, for example, it’s D-Day for free travel. Travel concession authorities need to re-publish their schemes on or before that date, in line with government targets for reductions in free travel reimbursements. It’s a tall order for them, given guidance itself could only be released in its final form after the comprehensive spending review.

Every facet of our economy needs to economise (save, no doubt, bankers who got us in this mess). It’s right and proper, therefore, that the bus industry shoulders its part. We already know that from April 2011 BSOG will see a 20 per cent cut. Reports of its demise at the hands of the aforesaid CSR were ill founded. Certainly, matters could have been a lot worse. But BOSG is one thing, free travel is quite another. Maybe the DfT mandarins were softening us all up when rumours of BSOG cuts came around, for the real issue remains free travel.

Let’s first remember that the government has assured the industry (and the electorate approaching 65 or over 60) that it intends to keep the national free travel scheme as introduced by the previous administration. It will eventually become an entitlement at 65 rather than 60. That will help the budget.

In terms of operator reimbursement, it’s widely reported that the government’s thinking will most affect rural and longer distance services across the nation (in England, that is). Reforms will have far more of an impact on the bus industry than BSOG. On average, about a third to 40 per cent of passengers carry a free travel pass. This rises significantly in some areas (so-called honeypots or areas with a large retired population base). It also rises even more on longer distance and rural services. Indeed, the deepest rural bus services might only ever carry free passholders. 100%.

Taking the average occupancy, the sort of cuts the government is expecting will lead to a reduction in total revenue of about eight to nine per cent. If you consider transport inflation is currently running at under four per cent—actually it’s lowest level since the CPT began compiling this information—then free travel changes mean a combined real terms cut of over 12 per cent.

Whereas dealing with BSOG will prove straightforward, this higher figure will be difficult to recoup, without steadfast action. Operators have little time in which to analyse their networks and make the necessary changes. The government expects such action and, truth be told, there are routes or journeys at times when cuts can be made. The problem always comes when this affects very real people who have no alternative; or the very people whose use of marginal services secures their journey on commercial journeys—and this comes back to the commercial network.