An unhappy new year for public transport?

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.

The national bus strategy

The national bus strategy

  1. If deregulation is dead then what is this that is replacing it?

For years we have been arguing that passengers in our areas don’t want on-street competition and private companies determining the key public service that they rely on. Instead they want single, integrated bus networks as part of wider single, integrated public transport networks. The national bus strategy shows that argument has now been won. It’s striking too how few friends bus deregulation has now that nobody seems to have turned up at its funeral yesterday to mourn its passing and to defend Nicholas Ridley’s original vision of a free and competitive market for bus services. But if deregulation as we knew it is dead then what is this that is replacing it?

The National Bus Strategy goes into a remarkable level of detail of what bus networks should look like in the future – from how buses routes should be numbered to how the fares should be structured and charged. In essence it wants the kind of bus network you would get through specification via a franchise or through municipal provision. But though franchising (and perhaps municipal operation in the future) are seen as legitimate ways of achieving these goals by the strategy, in effect bus services in England are being herded to the top of an Enhanced Partnership ski slope and given a hefty push. No Enhanced Partnership by April next year – no money. And whereas the few Enhanced Partnerships that exist have taken years to put in place, the Government wants the whole of England to be papered over with EP agreements (other than those who are on the franchise route) in a years’ time.

In some ways, it makes sense to seek to reduce the wriggle room that could translate into years of endless negotiations between local authorities and bus operators only to arrive at a watered down compromise and yet another bus strategy. But at the same time there has to be a danger that, on these timescales and with local government spending cuts having decimated transport planning capacity in the shires in particular, weak and baggy Enhanced Partnerships will emerge in order to access the cash – whilst the details that matter to passengers are spun out into the future. And Enhanced Partnerships are still a product of negotiation – rather than dictation by local authorities on behalf of national government in pursuit of a precise outcome. They also still operate within a deregulated market which is overseen by the competition authorities. So just how far can we expect the Enhanced Partnership tool to deliver the kind of  fully integrated single network with highly specified outcomes that the Government wants all across the country?

More widely, are we now entering – in theory at least – a strange hybrid model for bus provision where those operating bus services (when the music stopped before the pandemic) get to carry on but under a kind of quasi licence from local government which itself is under a kind of quasi licence from national government? And all within what is still nominally a free market where new entrants could burst upon the scene at any moment. Meanwhile, the bus strategy is in danger of bias against the route one option that could deliver the outcomes it wants – which is to write down precisely what you want and ask companies to bid to provide it. Because if you start an Enhanced Partnership to get the funding how easy, legally and otherwise, would it be to later ride two horses by starting the franchising process? How do you work closely with incumbent operators on an EP and at the same time run a free and fair franchising process where non-incumbents are on level terms? It’s strange too that though the document is keenly aware of the problems with timelines on franchising – and sets an ambitious timeline for Enhanced Partnerships – there is no mention of any reforms of the 2017 legislation which could learn the lessons from the slow take up and implementation of the powers it contains.

2. How much?

The National Bus Strategy is not short on ambition. It wants more services serving more places. It wants cheaper and simpler fares. It wants high spec green buses. It wants extensive bus priority everywhere. All of this will not come cheap when the pre-pandemic base case was that subsidy was well below what was needed to stem decline. Keeping bus services running during the pandemic is also burning through cash at a prodigious rate – and no one knows for sure how long social distancing will remain – or whether a post-summer third wave could mean restrictions are reintroduced. We know we have COVID-19 Bus Services Support Grant for now and we know we have the PM’s £3 billion. But beyond that we don’t know too much. Including what the quantum of overall funding will be available for bus, how it will be distributed or what the total price tag would be for all the goodies the Government wants. This doesn’t make it easy for anyone to plan ahead to deliver on both the ambitions and timescales that Government has set. On the plus side, with the PM right behind a policy which has pledged to transform bus services, however much HMT sucks its teeth about the price tag it will be difficult for them now to undermine the PM by cutting the bus industry off at the knees.

3. Beyond the headlines

There are some pretty hefty aspirations loitering in the odd paragraph here and there (all with their own price tags). Check these out for starters…

  • Five Glider schemes. I’m a big fan of Glider (and also good to see Northern Ireland get some attention for the good stuff it does on bus) but Glider works because it was very well thought through for the specific corridors it operates on and because the money was spent to ensure its quality from start to finish. Gliders in England will need to do the same if they are to work anywhere near as well.
  • A review of the eligibility for free bus travel for disabled people with a view to improving equality of opportunity.
  • Through fares for any journey involving bus, rail and light rail.

4. The dog that didn’t bark

The lack of any reference to addressing the antediluvian oversight and regulation of bus safety outside London is a big hole in the bus strategy. How can it be right that for rail and for buses in London, the analysis and data is there on safety risks and accidents (and is being systematically addressed) but nothing close to this exists for buses outside London? There is a glimmer of hope though in the review of the public service registration standards – which could be used to require reporting and data on accidents and risk.

So to borrow some lines from the late great Eric Morecambe. The national bus strategy has all the right notes, but not necessarily in the right order. But with some positive thinking…

Jonathan Bray is Director at Urban Transport Group

A longer version of this blog appeared in Passenger Transport magazine

Budget 2021: Five key takeaways for urban transport

1. The one year 2020 Spending Review, and the multi-year 2021 Spending Review, are more significant for urban transport than the Budget was likely to be – and indeed, proved to be. Also, between now and the 2021 Spending Review, we will have the bus strategy, and, if the road map to COVID-19 recovery works out, the Government will need to take some decisions on how it will fill the patronage/funding gap that COVID-19 will still leave behind. So plenty still to play for.

However, although public spending wasn’t the main focus of the Budget, it did put more flesh on the bones of the new funding streams that were announced in the 2020 Spending Review – perhaps most notably on the Levelling Up Fund. It also showed that the political dimension to funding choices, that are always implicit, are becoming more explicit through more ranking of areas to be prioritised and the greater involvement of local MPs.

2. Glass half empty? The Resolution Foundation analysis is that the Budget has further sharpened the axe which hangs over non-protected Government departments. They say: ‘Further planned cuts to public services spending will see budgets for unprotected departments (such as transport and local government) fall by £2.6bn next year (2022-23). And that by 2024-25, day to day public service spending per capita in unprotected departments will still be almost one-quarter lower than in 2009-10, with less than a fifth of the reduction in spending between 2009-10 and 2018-19 having been unwound. These spending cuts assume no further spending pressures elsewhere, which is highly unlikely given what’s in store for the NHS, schools and social care over the coming years.’

This is a particular concern in relation to the revenue support that public transport needs to recover, never mind, build its often low share of the trips that people make. It also has implications for the already denuded capacity of local transport authorities to retain and develop the skills and capacity they need to deliver capital investment and meet the increasingly complex environmental and social challenges that cities face.

3. Glass half full? Most of the extra £5bn promised for bus and active travel that the Prime Minister pledged in February 2020, is still to come. If you add in the existing Transforming Cities Fund and the new funds on their way, then potentially there could be significant capital funding on its way to spend on the right things on urban transport (public transport and active travel). Plus, few could argue that post industrial towns are not overdue an investment boost.

4. Meanwhile there’s a danger of a swing back to greater centralisation of decision-making with the risk that the Intra-city Transport Fund in particular becomes a tool by which HMT can manage the priorities of city regions which should be left to determine their own futures. More widely, the Budget reinforced the trend of recent years away from block funding towards places having to please and convince terribly clever people in London about the merits of their bids into multiple competitive funding pots.

5. One day a Chancellor is going to have to grasp the nettle of significant road vehicle taxation reform – not least because of the rise of electric vehicles. But yesterday wasn’t that day. The fuel duty escalator remains frozen. This further undermines both public transport’s competitive position and the slow progress being made to reduce transport’s drag on wider Government carbon reduction targets. But it could be that as the pandemic recedes, that 2021 is the year when more kites are flown around how a new and more progressive fiscal and charging regime for road vehicles could also fill the revenue gap that the electrification of vehicle fleets will cause in the current system.

Jonathan Bray is Director at Urban Transport Group