Party conferences 2012 – round-up

Nick Clegg being photographed at Lib Dem party conference

After the party conference bubble, a clearer picture of each party’s transport policies emerges

Autumn Party conferences can be a bit of a blur – mini-political Glastonburys for politicians and the travelling roadshow of journalists and lobbyists. A bubble of meetings, speeches and talk. But when you finally get on the train back to the real world you do leave with a clearer impression of where each party is at on the key transport issues.

Liberal Democrats

On transport, the Lib Dem conference is all about Norman Baker – who continues to throw his considerable energies into making the very most of his tenure at Transport. He’s doing this by shaping local transport around his own priorities – but within the context of a coalition Government that is reducing and devolving public spending.

What are Norman’s priorities? I would say:

  • The mainstreaming of spending on active travel.
  • Holding the line on the use of all the bus powers in the Local Transport Act 2008 (including Quality Contracts).
  • Making sure that the more rural areas don’t lose out from any changes.
  • And perhaps, most challenging of all, trying to find a way through the thicket of a fragmented, deregulated / privatised public transport network to get to the prize of a more integrated offer for passengers including smart and simple ticketing.

This degree of activity and intent is not a common feature in junior transport ministers (who usually cautiously read out whatever the officials give them before moving on). In some ways Norman’s approach is also a further example of ‘managed localism’ – via a series of centrally determined funding competitions – but there’s no doubt that it is proving successful on objective one especially, which is the mainstreaming of cycling in particular with local transport policy.

Labour

Meet the new Barbara Castle? If Labour is elected (and all other things remain equal in the shadow cabinet) then Maria Eagle could go right through from opposition to government. Why the Barbara Castle comparison? Well in the 1960s Harold Wilson decided that for once Government was going to make transport a priority and Castle seized the opportunity with one of the biggest packages of progressive transport legislation the country had seen – the 1968 Transport Act – which among other things created the PTEs.

At Labour conference Maria Eagle certainly seems fired up to seize the moment if she has the opportunity. If the Eagle lands at Marsham Street then a not-for-profit InterCity network, a devolved local rail network and a managed transition from bus deregulation to local transport authority control would be her priorities. However there’s a lot that could happen between then and now – and she would need the two Eds on her side too.

Conservatives

If the new Secretary of State was appointed as a ‘steady eddie’ to keep the transport brief tranquil then, not for the first time, this is already proving harder than it looks – with the west coast franchise blowing up in the DfT’s face.

But that aside, what also emerged from the Conservative party conference was:

  • A very firm commitment to HS2 from McLoughlin to further demoralise the anti-campaign and to kill off the niggling stories in the press about whether it’s really going to happen or not
  • The emergence of a ‘mods and rockers’ debate on buses within Conservatives who are interested in buses. Whilst new DfT Stephen Hammond continues to pursue the traditional Eighties-style hard line in favour of bus deregulation, Steve Norris told the pteg fringe that it should be down to local transport authorities to decide. Indeed there’s a fair few Conservative MPs now who are far more interested in outcomes than they are in defending the principle of bus deregulation and recognise that franchising is a perfectly reasonable view to take.
  • Roads are back – kinda. Talk of building new motorways as a gut response to economic problems is becoming semi-respectable again – but there’s far from a groundswell for it and perhaps a trace memory of just how unpopular massive road building programmes can be – particularly among voters in the prosperous, over-heated South East

Time for Whitehall to let go?

This was the question that each of our fringe meetings posed in its title. And the answer at all three was a resounding yes! The will and the impulse is there…but to get the devolution that really matters off the launch pad (bus and rail) before the gravitational pull of the civil service pulls it back to earth. Now that’s the hard bit.

Jonathan Bray

Meanwhile in Sweden…

Boxes from IKEA on a trolley

IKEA is among the companies supporting Sweden's ambition to double the market share of public transport

Interesting developments in Sweden where a package of reforms to the way public transport is run has been tied to a doubling of public transport’s market share. An ambitious goal by any standards.

The plan (as I understand it) is to set up new PTE-style regional transport authorities who will take responsibility for local public transport provision. Where services are not specified private companies will be able to offer services on a commercial basis. In some ways the reverse of the approach in GB outside London which is that the local transport authorities specify services where there is no commercial provision.

It will be interesting to see how the Swedish approach works in practice as there’s clearly scope for a commercial operator to destabalise a specified network through attacking the busiest routes. Although perhaps they don’t behave in such beastly ways in Sweden! Also it could be that the greatest scope for new services is new inter-urban routes?

The collective push by national government, transport authorities and commercial companies is assisted by some hefty infrastructure works in the largest urban areas as well as some innovative marketing initiatives. For example in Gothenburg 50,000 committed car commuters were given a fortnight’s free travel on public transport as an alternative. And that mighty symbol of Sweden – IKEA – offers a reduction on home deliveries for those who turn up at their stores by public transport.

The doubling concept also ties in with the UITP’s PT x 2 campaign giving that campaign a shot in the arm in the process.

There’s more on the plan on this English language version of the Swedish Doubling Project’s website

http://www.svenskkollektivtrafik.se/fordubbling/Engelska/

The short film is worth watching.

Jonathan Bray

CC myopic obsession with on-street competition risks doing more harm than good for passengers – but will this pave the way for Quality Contracts?

Transport authorities and bus operators have often been at polar opposites when it comes to the Competition Commission’s on-going investigation. However, there is one point on which we all seem to agree – the CC’s recent obsession with on-street competition is dangerous and largely misguided. What’s more, it risks getting in the way of high-end partnerships and could take us back to the Wild West of the late 80s. But is there a chance this could pave the way for Quality Contracts?

Vintage cornflakes box

Buses cannot be treated like a typical consumer product

Buses are not like cornflakes

Despite its earlier recognition that “head-to-head competition tends towards instability, the closer the competition between operators becomes” the CC’s latest position isn’t entirely surprising. In reality, there was always a risk that it might revert back to the safe and comfortable haven of perfectly competitive markets. This is the norm for most typical consumer products, say cornflakes, where there’s a permanent threat of competitors coming along and offering a similar product at a lower price. Retailers will put the competing products on their shelves and consumers will logically buy the cheaper one, placing pressure on the incumbent to review its offer.

The problem is that bus services are a tad more complex than cornflakes. Critically, they’re perishable which means that they can only be purchased at very specific points in time. Many passengers will arrive at a bus stop at the same time everyday and will expect to board the first bus that shows up. The decision to wait around for another bus or to adjust the timing of a journey increases the non-monetary cost incurred by passengers. At the same time, if a bus turns up immediately after a preceding service it will find very few passengers to pick up. We have shown in our response to the CC’s report that for these reasons, new entry into an existing corridor at evenly spaced intervals between the incumbent’s services is very likely to be loss making, even where the incumbent is earning substantial profits.

This means that there is a very strong incentive on a new entrant to run its services immediately ahead of the incumbent’s timetable. In turn, the incumbent will respond by adjusting the departure of its services and this process will continue until one of the operators decides to withdraw from the market. Typically, the operator with the deepest pockets survives. The all too familiar by-products of this process, observed most clearly in the post-deregulation period, are an irreversible loss of demand due to network instability, short term losses to operators (eventually leading to higher fares) and an increasingly concentrated market where the law of the jungle dictates who survives.

In a sense, the CC is right – profits have never been lower than in the post-deregulation period. But paradoxically (and this is something the CC probably struggles to understand) this has not resulted in a better outcome for passengers. In the five years following deregulation, bus patronage in the metropolitan areas declined by a quarter despite a substantial increase in bus-kms. Without some degree of timetable coordination, unfettered on-street competition will lead to operators losing money and passengers getting a less reliable and more expensive service. Regrettably, the CC report has also raised serious doubts over high-end partnerships, the type of measure with the potential to achieve a more efficient and sustainable outcome in the context of on-street competition. Evidence from Oxford and Merseyside suggests that where competition has developed, Qualifying Agreements can indeed be used to offer a better and cheaper product to passengers, albeit requiring a degree of regulatory oversight from local transport authorities.

So will the CC be successful in delivering more on-street competition? And how will local transport authorities respond?

If the CC’s remedies achieve its stated objective, this could well take us back to the bus wars of the late 80s. Ironically, this would put increasing pressure on LTAs to bring in SQPs or Quality Contracts, the types of remedy that the CC has been so keen to avoid. If, on the other hand, the remedies have little or no impact, then this may act to strengthen the case for Quality Contracts and we may well see new proposals coming forward. Following the publication of the CC’s report, we have already seen announcements from Nexus and WYPTE which seem to show a growing resolve. On the other hand, the CC’s ambivalence over partnerships could lead to a growing sense of frustration amongst LTAs as operators become increasingly reluctant to participate in fear of the competition authorities. The recent findings on tacit coordination in the North East and the Wirral are only likely to compound these fears. The effect could be to force some LTAs to move towards Statutory Partnerships and possibly Quality Contracts.

So it seems possible that the CC’s myopic obsession with on-street competition could end up back firing and eventually pave the way for a more regulated market. I only wish they would have worked this out before repeating the same mistakes of the past. In the meantime, expect turbulent times ahead.

Pedro Abrantes

This article first appeared in Coach and Bus Week