covid19

An unhappy new year for public transport?

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It’s been a shaky start to the new year for public transport and it could get a lot rougher yet.

Let me count the ways…

  1. The ‘work from home where you can’ advice has hit public transport’s core commuting market hard. Meanwhile the pre-Christmas binge on shopping and socialising which kept public transport patronage afloat looks like it has been followed by a hard January comedown.
  2. Pre-Omicron, driver shortages were a serious problem for bus services with operators taking different approaches to managing them (in terms of whether the service reductions are short term or long term and whether they are focused on frequent routes or less frequent routes). Operators were also taking different approaches to how much effort and resource they were putting into recruiting staff.

    Also, and unlike for road haulage, where the DfT has a proactive strategy for addressing multiple aspects of the driver shortage affecting the industry, there was no equivalent strategy from DfT for the driver shortage crisis on the buses. This has now been exacerbated by Omicron and associated self-isolation. Industrial action is also on the rise.
  3. Additional COVID funding support for urban public transport for public transport outside London runs out by the end of March and it’s not clear whether that funding will be sufficient given Government won’t share with us the patronage projections on which it’s based (which may prove to be optimistic).
  4. HMT standard practice is to take any decisions on additional funding right to the wire, however local tansport authorities have to set budgets well before the end of March and plan any service changes that may be required.

All of which points to operators moving to rebase commercial networks at a significantly lower level than they were pre-pandemic (and some are now starting to break cover on this). The onus then passes to local transport authorities to step in and pay private operators to keep services running. But local transport authorities themselves have limited resources to do so and the prices that private bus companies are quoting for keeping those services running have soared (price increases of 50% are not uncommon). This reflects both rising costs and operators taking advantage of low levels of competition for tenders in order to name their price.

The funding challenge for transport authorities with large light rail systems is particularly acute given that most of the costs of light rail systems are fixed so significant cost reductions are difficult to achieve (short of closing them down). They also have legal and fiscal responsibilities for their light rail systems which they do not have for bus services. So, if light rail funding isn’t extended beyond March 2022, then transport authorities may be forced to make savings from spending on bus in order to keep their light rail systems operational.  

It wasn’t meant to be this way. The national bus strategy (‘Bus Back Better’) launched in March 2021 envisaged a new dawn for buses with more, cheaper and greener bus services everywhere. It was predicated on £3 billion of additional ‘transformational’ funding and on the tacit assumption that the pandemic would soon be over. However, the pandemic is still here and in the November 2021 Spending Review the Treasury didn’t countersign the £3bn cheque that Number Ten wrote. We still don’t know how the bus money that the Treasury did agree to will be divided up. If more of it isn’t purloined for additional COVID revenue support, then this additional investment will be a shot in the arm for bus services in the areas that benefit – including through more bus priority schemes.

But the danger is that this may be too little too late as the first half of 2022 sees another lurch downwards in the scale and extent of bus networks - following on from years of pre-COVID decline and the hammer blow of the pandemic itself. There’s still time (but not much) to avert this. It could be done through devolving adequate funding to transport authorities to support networks in a planned, integrated and cost efficient way (rather than allowing the DfT to continue to take the path of least resistance and route hundreds of millions of pounds of COVID funding to private operators so that they can manage the decline of bus services in a way that serves their own commercial and corporate interests). It would also require a national strategy for tackling driver shortages as well as pressing the fast forward button on allocating the funding promised in the spending review to improve bus services so transport authorities can crack on without further clawback and second guessing from Whitehall.

Time is running out though.

Jonathan Bray is Director of the Urban Transport Group

Read more about the threat to public transport in our city regions in our briefing.

Funding, sharing, recovery & legacy - a weekly blog post on urban transport and the COVID-19 crisis

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Here are some Sunday morning reflections on where things stand for urban transport on the COVID-19 crisis as we prepare to begin another busy week.

1. We have done everything the Government has asked of us during the crisis - now we need the Government to stand behind us

The Government’s overall strategy has been helicopter drops of cash for households, business and local government, accompanied by relaxing of the legal and regulatory framework so that cash can be deployed by the recipients as soon as possible in order to keep the overall show on the road. This has been followed by sub-sectoral support. For transport, rail was first to go, with quasi re-nationalisation, leaving railway people free to get on with the job of running a core service. For bus (where bus deregulation makes life more complicated), we have already had phase one which is local and national government maintaining the funding flows they control for concessionary fares, supported services and fuel subsidies (BSOG), whether or not those services are being provided or not. Phase two should be ready to roll early this week (which broadly speaking will be additional payments for operators on the basis of the service they are actually providing). The idea is that in return for maintaining a level of public support that seeks to compensate for lost income from passengers, operators will do the right thing (provide an essential network based on where essential workers are and where they need to get to) in a collaborative way with transport authorities. And at the same time, that they won’t do the wrong things (like go ahead with planned fares rises). It’s early days yet on how well this plan will work in practice over the coming weeks - but it’s definitely a good thing that the Government has made additional funding support to maintain bus networks an early priority. And on the ground, private sector bus operators and public sector authorities and their staff are working hard to make it work and to provide the essential network that essential users need.

However, so far public sector transport authorities are not seeing any of the additional funding (other than at the margins). Additional funding for local government goes direct to councils not transport authorities and the extra funding for rail and bus goes to the private sector providers not the public sector transport authorities. And it’s not just those private sector providers that are haemorrhaging patronage (and therefore income) - the same is happening on our tram and light rail systems (like Manchester Metrolink and the Tyne and Wear Metro). Merseytravel is also financially exposed on its Merseyrail Electrics rail franchise and as the provider of a World City integrated public transport network, TfL is losing income on an altogether different magnitude.

At the same time as losing income on their own systems, transport authorities are also making good the lost income of private bus operators (through continuing to pay for concessionary travel and supported services, etc). And all authorities are losing revenue from rent, advertising and broken contract clauses (as projects are put on pause because of the virus). This can’t go on. Especially as this isn’t just about maintaining an essential service for essential workers in the here and now, it’s also about being in a fit state to crank services up when we come out of lockdown. Plus, being able to resume the kind of investment programmes and service improvements that will be needed to tackle problems that haven’t gone away in the meantime - like climate change and the levelling up agenda.

So a big part of our work in the week ahead will be making the case to Government for the funding deal transport authorities need. On this, we have had very good engagement with the Department for Transport Local Transport (who we know are working incredibly hard to move at pace). But to unlock the funding, the work we are doing with them needs to land at Treasury and be seen by Government as a whole as priority.

We have done everything the Government has asked of us in responding to this crisis - now we need the Government to get behind us.

2. Shared approaches to the crisis

The other big job we have (as we have been doing throughout the crisis) is networking between our transport authority members so they can share approaches. We do this through a series of rolling telecons with groups leading on light rail, bus, communications, staffing, active travel, legal and finance, as well as our overarching Board level co-ordinating group (which meets at least three times a week). As a complex coordination job this is working well.

3. Recovery and legacy

The task of winding down networks rapidly but matching them to the needs of essential workers (all whilst protecting staff and seeking to ensure social distancing and securing the funding and legal framework to do this) has been, and remains, an enormous operational and practical challenge. At some stage this process will go into partial and then full reverse (and then be partially or fully reversed again depending on how the COVID-19 pandemic unfolds) which will bring with it new operational challenges, which we are turning our attention to. There are also the wider and enormous long run ramifications of this transformation on all our lives for transport planning (from the future of the daily commute to whether this experiment in mass behaviour change will normalise or inhibit the kind of behavioural change that climate targets imply). Shaping the best legacy we can from the crisis is something that our Assistant Director, Becky Fuller, is leading on and that our transport planning group will be addressing in their first telecon next week.

Another week of tough challenges and long hours begins, but put into perspective by the news that five London bus drivers have died from the virus and the dedication of front line staff at our member organisations in keeping core public transport networks running.

Jonathan Bray is Director at the Urban Transport Group