No more tinkering – we need ambition

Bus funding helps to achieve a multitude of policy objectives for government – but real reform is required, not more of the same, writes Jonathan Bray.

Oxford City View, Oxford University, England, UK

Putting public money into the bus is one of the biggest bargains in transport policy – but despite this the bus has been one of the biggest losers from recent trends in transport spending. Urban Transport Group’s new report, The cross-sector benefits of backing the bus, shows that supporting bus services aligns with 29 policy goals of 12 departments across Whitehall. And not just the departments you would expect.

Buses tick the boxes for the Department for International Trade because the British bus manufacturing industry has an impressive export track record. The bus meets the goals of the Department for Work and Pensions, such as providing access to opportunity. It ticks the boxes for the Department for Environment, Food and Rural Affairs because buses support rural economies. And the bus helps the Department of Health and Social Care as buses promote physical activity, give older and disabled people independence, and because they could play a greater role in a more efficient approach to non-emergency patient transport.

In short every pound that supports bus services cuts congestion as well as contributes to numerous wider social, economic and environment objectives. Without public support for bus services, labour markets will shrink and more people will be unable to participate in the economy. Skills and apprenticeships will be hit because of reduced access to further education. High street regeneration will be damaged through reduced access to town centres and there will be increased pressure on congested road networks as some bus users transfer to the car. There will be public health impacts from more isolation and loneliness and less physical activity. The young will be hit hardest. A divided society will become more divided.

Highways England has more money than it can realistically spend on expanding inter-urban road capacity despite this approach failing overall in its own congestion cutting terms, instead creating more sprawl, carbon emissions and poor air quality. Yet, at the same time, all the main sources of national funding for bus have been cut back. The case for more bus funding is strong, but the way in which buses are funded at present is not helping.

Indeed the way buses are funded nationally is as antediluvian as the way many other aspects of the mode are overseen (such as safety and consumer rights). So the six main sources of funding for the bus are: Bus Service Operators Grant (BSOG) from DfT (which will be reviewed as part of the forthcoming spending review); funding for concessionary fares and, indirectly, for supported services, from MHCLG; one off funding grants for things like green buses from DfT; general DfT capital and revenue funding for local transport, some of which is used for buses; and DfE funding which supports education transport.

Having three government departments involved (with arguably the MHCLG as important a player on bus funding as the DfT) is complicated enough but an absence of coordination across these funding departments, with little cumulative understanding of the overall implications of their respective decisions, has led to haphazard and inefficient outcomes. That would be bad enough, however some of the individual bus funding streams have been bent out of shape due to a combination of neglect and because other political priorities were seen as far more important.

Take BSOG as an example. There may once have been a logic in basing bus subsidy on fuel use but that was then and this is now. Now we are in an era where cities are scrambling to tackle poor air quality on extremely demanding timescales and when everyone everywhere with any sense is desperately seeking to reduce carbon emissions.

Or take the funding of national statutory concessionary travel schemes. The link between government funding for these schemes has now been severed from the cost to local transport authorities of paying for it. What was a ring-fenced funding stream from government for a scheme that the government decided it wanted, has now been lost within wider local government funding. So we have economists arguing about what it costs operators to provide concessionary travel (right down to wear and tear on tyres) in different areas in one room and different economists in another room arguing about how the costs of providing it should be factored into local government funding formula serving different areas, arguing about something called ‘rurality’. There is no door between these two rooms.

And finally, all of this is compounded by the fact that subsidy streams are seen by operators (most of which are part of wider multi-modal and multi-national corporations) as contributing to overall income, which in turn contributes to their expectations on margins. One of the innumerable downsides of bus deregulation is that making the case for more bus funding is challenging as the Treasury can see that subsidies are disappearing into black box accounts of companies which often make a good return out of local monopolies. So why should they give them any more money when we don’t know where it’s going? The best counter argument is that despite these leakages it’s still worthwhile, given the exceptional overall value for money of bus funding and that there are ways of limiting that leakage.

So hopefully so far I have shown that the case for more bus funding is very strong and that the bus has not been getting its fair share of overall transport funding. But at the same time the way buses are funded is too complex, too inefficient and lacks credibility. This is why as well as making the case for more resources UTG have also made the case for funding reform via a new ‘Connectivity Fund’ which would provide a simplified, enhanced and ring-fenced revenue stream for buses. We argue that it should be devolved to local transport authorities so it can be best targeted on where it would have most impact locally.

So there is no point providing additional subsidies for real time information if local government has already paid for it (something which the last set of BSOG reforms did, for example, creating a windfall for some operators in the process). Equally in a rural area it may be more supported services you want rather than electric buses, but vice versa in a polluted urban area. It is hard to make these trade-offs from Whitehall unless you want to create an expensive and bureaucratic system to second guess what would work best locally. Instead, we argue for a bigger pot (one commensurate with the scale of benefits that backing the bus can bring) and one that can be used in ways which work most efficiently and effectively locally.

We will see how comprehensive a review of BSOG we get in the spending review this time around. Given wider Brexit turmoil it’s possible that it won’t be that comprehensive. However, there’s a danger it starts off the same way as the last two BSOG reviews (which largely fizzled out). Firstly, by trying to get more for less (or the same amount of money) which risks operators responding to the de facto reduction in income through service reductions and fares rises. Secondly that a national system based on either payment by passenger or payment by mile is proposed. In the past these options have crashed and burned because of the eventual realisation that either way you get significant winners and losers. Broadly speaking urban areas win on per passenger and rural areas win on per mile. Whoever loses causes a political fuss. Both also have unintended consequences. For example, what are the implications of further encouraging bus operators to carry more concessionary passengers if BSOG becomes a per passenger incentive?

Buses are a very good thing, funded in not a very good way. The mood music in Whitehall has been far better about protecting of bus funding than it was last time BSOG was scrutinised. But with the bus in decline and punch drunk from previous funding cuts, now is the time for something more ambitious than tinkering and holding the line.

Jonathan Bray is the Director of the Urban Transport Group.

This blog first appeared in Passenger Transport magazine

Buses – it isn’t all about congestion

Passengers paying a bus fare

I agree with Brian Souter. When he said at last year’s Scottish CPT event that the bus industry relied too much on gut instinct and not enough on research. The Stagecoach chairman went on: “How much have we put into research and development in the last five years? We’re getting worse, not better…

Indeed nothing better exemplifies this state of play than incumbent monopoly bus operators’ favourite ‘fact’ of all time. That buses can’t prosper unless traffic congestion is tackled. However, I’m going to suggest something shocking in a sector which holds this truth to be self evident. Which is that the evidence base does not support this assertion. The evidence base is telling a different story – which is that there are many other factors at play in determining whether bus use rises or falls in a particular area and some of these may carry greater weight than traffic congestion depending on the local circumstances.

If it were always true that bus use is intrinsically linked to journey speeds, and that this is the only thing that matters, then why is bus use falling in the only major city region where traffic speeds are rising (South Yorkshire)?

If it were always true that bus use is intrinsically linked to journey speeds, and that this is the only thing that matters, then why is bus use falling in the only major city region where traffic speeds are rising (South Yorkshire)? And when one looks at the top 10 places where bus use is high or growing, why are there so many places which are not the first locales you would think of in connection with the phrase ‘free flowing traffic’?

So in the top 10 for growth in bus use, or highest bus use per head (or both) are Bournemouth, Bristol and Reading which were respectively 8th, 10th and 12th in a survey of the most congested places in Britain in a Go Compare survey last year. It’s even possible that in certain contexts congested conditions could give the bus a competitive advantage over the car: as in you have to sit in traffic anyway then you might as well get the bus (where you can also do things you can’t do when driving – such as maintaining your smart device addiction). And that’s even before we start talking about bus decline in places, and at times of day, when congestion is irrelevant (because there isn’t any) such as many places in the evenings, in the off peak and in many rural areas all day every day.

In our recent report we sought to take a more objective, look at all the factors that are relevant when looking at what’s driving bus patronage change. I won’t go through them all here (and there are few surprises in the headings) but it’s interesting how the same factors can have different effects depending on the local market.

The state of the UK economy is one factor in driving demand for travel, but the ramifications can play out differently in different areas. So a growing economy could lead to more car ownership and less bus use in places where car ownership is currently low and bus use is high. Meanwhile, in London, the rate of growth of the London economy (and inward migration) has slowed, whilst at the same time incomes have not kept pace with living costs. One of the impacts of all this has been less discretionary travel in London which in turn has hit bus use. Elsewhere, buoyant city centre and retail economies have been good for the bus in some of the more prosperous top 10 areas where the bus is performing well.

Young people are another fascinating and complicated factor. Young people are moving away from car ownership at pace – although not necessarily towards the bus. However, where the circumstances or the fares offer are right (or both) then this can be great news for the bus. So the youthful demographic of the West Midlands looks like it’s a factor in recent better patronage news there. Bournemouth, being the second biggest centre outside London for English schools could well be giving a helping hand to bus use there. The location of new student living quarters in Bristol is a plus for the bus in the city. And then there’s the simple young peoples’ fares offer in Merseyside which has had such a transformational effect on ridership. Who would have guessed it? Simpler and cheaper fares can bring back passengers to the bus. More passengers in the National Express low fare zones in the West Midlands is a further example of this.

Whilst I’ve knocked the idea that congestion is the only thing that matters, my argument isn’t so simplistic to suggest that it is irrelevant – far from it. Making bus journey times faster, more consistent and more competitive with alternative modes should (all other things being equal) make bus services more attractive and should help drive patronage upwards. This is why back in 2014 we were the ones that initiated the joint work with CBT, CPT and Greener Journeys on making the case for bus priority schemes and setting up the bus priority works website. It was also instructive that, despite the rhetoric about the importance of bus priority at that time the industry was unable to furnish us with any evidence about the benefits of any schemes to them that we could highlight in the materials and on the website. Since then the evidence base is now in much better shape and as UTG we continue to support bus priority schemes.

However, supporting individual well thought through bus priority schemes (which often combine with wider street works to benefit local residents and retail as well as cyclists and pedestrians) is very different from the rhetorical open ended demands that urban congestion be eliminated for the bus – otherwise the bus has no future. This just isn’t going to happen because busy cities will continue to have busy streets. Streets which will also have less space for vehicles of any sort as more space is given over to space for people. Urban cycling is also going to grow, and better provision is going to be made for it. More people walking and cycling is a good thing overall . People are going to want to use taxis, and shops need deliveries.

Like the Rev. Awdry story about Henry the Green Engine refusing to come out of the tunnel because it was raining, some in the bus sector are refusing to come out of their tunnel because of all the horrid cars

Having said that the bus can and should get a better deal on the streets – but it isn’t suddenly going to get its own way everywhere, every day. And proponents of the absolutist arguments on congestion know all this anyway (hence the lack of detailed proposals). So the danger is that it becomes nothing more than an all purpose excuse and a cop out. Like the Rev. Awdry story about Henry the Green Engine refusing to come out of the tunnel because it was raining, some in the bus sector are refusing to come out of their tunnel because of all the horrid cars.

When there is so much in a deregulated, and mostly uncontested industry, which is entirely under your control (and which has worked elsewhere) it seems rather convenient that the one thing holding you back is out of your control. Plus if they really meant it about congestion then it would be nice if there was more industry support for poor old local government over taking on the powers to enforce yellow boxes and other moving traffic offences. This would be instantly good for bus reliability without the need for any time consuming new infrastructure.

In avoiding simplistic solutions our report put forward three factors which seem to be present (singly or in multiple) where bus use is high or growing. Firstly, where car use is expensive or difficult. Secondly, where car ownership is low and there is a strong culture of bus use. Thirdly, where significant and continuous research and development has been put into ensuring the nature of the service matches the needs of the local market. Hence growth has happened in some surprising places (including Jersey and the famous 36 on the Harrogate to Leeds corridor) as well as in some of the places on the top 10 buses list.

We intend to do more research to test these ideas further. Factors one and two are not always easy to replicate but factor three (the research and development) is applicable everywhere. We need more priority for buses on our roads. But this is an industry that also needs to give more priority to research and development and on getting under the skin (rather than concentrating on the spin) about what’s really driving patronage trends.

This article appears inside the latest issue of Passenger Transport. The PDF of the article can be downloaded here: Buses – it isn’t all about congestion‘.

The high street retail apocalypse (and should public transport learn to stop worrying about it?)

tom-sodoge-59677-unsplash

I took the temperature of the debate about the future of UK city and town centres at a packed out Key Cities conference this week. Here’s what I learned…

Is the end nigh for the high street?

Most things are still bought in shops, however high street retail is clearly in retreat as on-line sales go up. It’s big-medium centres rather than the very largest city centres that are being hardest hit by this trend as the surviving big high street names hole up in the core cities. Out-of-town superstores and retail parks are also under threat from the retail apocalypse as why would you pick your items from the racks of a big retail shed when a robot will do it for you from a distribution shed and then have it delivered to your door? As one speaker said, “we are moving from retail which revolves around the car to retail which revolves around the phone”. And then there’s the retail jobs apocalypse as many of the high street stores that remain do away with cashiers in favour of contactless payment.

Given the above, there was a strong consensus that plans for town and secondary city centres can no longer be based on retail. And retail also needs to be about more than selling stuff. It is now about attracting people to visit town centres for an experience – because if you are having a good experience you will probably buy something. If you aren’t then you will buy it online. What is the unique story of this place? Why is this place different? Retail was all about making every high street look the same. Now it’s about making everywhere look different. It’s the fresh food emporium (hosting multiple independent outlets and cafes) which will be the anchor of the town centre – not the big name department store.

‘Right sizing’ was another key phrase – as in some town and city centres are just too big for what’s now needed. Right-sizing retail can also mean making room for more housing in town centres – which can also bring more life to them. Though the problem for many towns and secondary cities is that too much of what residential there currently is can be student, poor quality or high end. The housing and social mix is missing.

There’s clearly unfair competition from our tax dodging, smug, wannabe overlords of the internet and the moves the Government has made so far on retail business rates don’t go far enough to redress the balance.

What does all this mean for public transport?

In principle, less shopping trips (particularly into secondary centres) is bad news for the bus, especially because a lot of them are made on the bus. However, as secondary centres shift their focus to making themselves into more distinctive and attractive places to spend time in then, can the bus also align itself with this rediscovery of local pride and identity? Instead of a ‘by the numbers’ corporate brand that happens to serve this particular place, what about bus services that have that places identity running through them like Blackpool through a stick of rock, which are all over the annual events programme of that place and whose branding is that of the place they serve?

Looking at both rail and bus there are also some big opportunities to be the catalyst for more housing in town and city centres either through building them into new or redeveloped stations and interchanges or through release of brownfield sites. There are also opportunities for stations to become destinations in their own right (through opening up redundant buildings to community, social or independent retail use). Magnificent Victorian station buildings can also become the stunning gateway to towns and cities that people want to visit.

A few final, and wider observations.

We can’t keep hammering the resources of local government and expect to get difficult challenges like turning around town centres done as efficiently, rapidly and well as it needs to be. As someone said, local government is the ‘custodian of place’ and both the built heritage and the cultural capital of towns and secondary cities needs a lot of careful TLC. This needs people who feel valued, will stick with it for the long term and have the skills to do it.

There was very little discussion of ‘smart cities’ – much more interest in the material world of people, community and buildings.

The heavy focus on retail left a nagging doubt that the push to turn places into attractive destinations can sometimes feel like a push for sufficient gentrification of town and city centres so that nice middle class people like us can sell expensive coffee and such like to other nice middle class people like us. Yet, with one in five people in the UK below the poverty line (more in some of our towns and secondary cities), what is this agenda doing for them? All the key cities have far wider policies and programmes for tackling poverty and raising economic performance of course, which is good because towns won’t be fixed by expensive cups of coffee alone!

 

Overall there’s a sense that the collapse of more big retail names and the hollowing out of more high streets has elevated the issue to the first rank of domestic political concerns and galvanised some new thinking around reimagined town and secondary city centres. Public transport may also need to do some reimagining in order to stay relevant to high streets and town centres that are redefining their role as the phone supplants the car as the agent of retail revolution.

Jonathan Bray is Director at Urban Transport Group

Read our recent report About towns – How transport can help towns thrive