Hammond’s world of numbers

Philip Hammond parachutes in

Philip Hammond is the equivalent of a particularly able finance director, parachuted in to take over what he sees as a failing company – a company perilously close to administration. He’s no romantic like his equally able predecessor, Lord Adonis, but he is just as focussed. You know where you are with Hammond.  Mainly because he keeps telling you. Telling you where his thinking has got to, what he’s going to focus on next, and what he wants to achieve. While he’s helpfully clear on where he’s at – he does listen too. He will adjust his mental spreadsheets (if not his wider worldview) if your arguments are persuasive. However it better be a good argument – with the figures to back it up. Bluster and blather and you could find yourself skewered.

So six months into Hammond’s tenure at DfT where have we got to?

Now the CSR is out of the way, Hammond will focus next on rail reform. Bus policy’s turn will come half way through 2011. Once the Competition Commission has confirmed (expected early 2011) that there’s, er, an issue about monopolies in the bus market (who knew!), the interesting bit begins when they start to consider potential remedies. Their conclusions in Summer 2011 will give Hammond the springboard he wants to look at all the associated issues around the bus powers in the 2008 Local Transport Act, as well as the options around BSOG reform and the wider bus subsidy regime.

Cold hard numbers are the order of the day at DfT

Cash-wise PTEs know roughly where we are on capital spending. Predictably public spending on local transport has been hit harder than London or national rail. But at least we’ve still got capital budgets. There were some realistic scenarios where it could have been wiped out altogether for a year or too. However within capital spending the block of funding for smaller transport schemes (including bus priority, bus stations and so on) got hit hardest. Word is that collectively (by which I mean lobby groups, local government and the industry) failed to do a good enough job of collecting the evidence of the benefits of these kind of schemes to persuade Hammond and the Treasury. We need to do a better job in future as in Hammond’s world it’s all about the cold hard numbers.

Revenue funding is harder to call because our funding depends on the wider local government settlement. That will pit old people’s homes against young people’s concessions and local libraries against local bus services. The kind of decisions that most people wouldn’t want to make. Although it seems some more rural local authorities needed no encouragement to signal that they are pulling out of public transport – leaving the rural poor stranded. In our areas – where the bus matters more – the shape of the bus network will ultimately be determined by four factors. What budgets we retain for supported services (about fifteen per cent of the network at present), how our economies respond to the coalition’s shock treatment, the extent to which concessionary travel is adequately funded and the impact of BSOG cuts. Draw your own conclusions.

Reasons to be cheerful?

The bus - a cause celebre - who'd have thought it?

How BSOG has become a cuts cause celebre. I would never have believed that something as arcane as Bus Service Operators Grant is now merrily tripping off the tongues of MPs as a prime example of something worth saving. The cross-sector alliance (from CPT to CPRE)  that sprang up so rapidly in its defence was also remarkable. Better still the pro-BSOG campaign worked despite the best efforts of some of the more hysterical high priests of the sacred cause of maintaining the ideological purity of bus deregulation. Loss of BSOG, and the consequent decimation of bus networks (and the lives of the poor who depend on them), seemed to be a price worth paying for these bubble-think zealots. With friends like these…

So a 20% cut isn’t great but I’m convinced it would have been much worse if there hadn’t been such a clamour around saving it. The campaign also showed that bus policy is no longer a political free fire zone where you can get away with anything -and the media and MPs won’t notice. That in itself is some kind of cause for optimism.

Jonathan Bray

This article was first published in Coach and Bus Week

A perfect storm?

A storm brewing for the city regions outside London?

It’s not just the indifferent weather that’s been casting shadows over the long summer days. At the back of many minds is uncertainty and concern over just how bad it’s going to be once the spending review kicks in from the Autumn onwards. And for local transport outside London – it could be very bad indeed. This is because bus services are at the wrong end of a series of much higher level decisions. Transport gets less protection than other Departments (like health and education). Within transport there are inescapable costs and commitments – as well as areas of the budget that are subject to long term deals (such as national rail and London). Once you’ve factored that in, this means all the cuts have to come out of more discretionary areas of spend – which is not fixed or subject to long term deals. One of those areas is local transport outside London. Add into this mix the rising costs of the legally mandatory national concessionary travel scheme and you are looking at some frightening scenarios for what happens to available budgets for non-mandatory spending on concessionary fares, BSOG, tendered services, bus stations and stops, bus priority schemes, information and promotion, safety and security schemes and all the other things that hold a bus network together. Indeed analysis for pteg by Grant Thornton suggests that non-protected areas of the transport budget (including local transport spending outside London) could be reduced by nearly 90% for capital spending by 2014/15 whilst revenue spend could fall by between 56% and 85% over the same period.

Shiny new buses for London but what future for bus services elsewhere?

Looking North

One rarely senses excessive interest or concern from Whitehall officials about the fate of anything north of the home counties but the politics of getting some of this stuff wrong has been picked up by Ministers. For example how will it play for the Government to be funding a free bus pass for pensioners at a cost of £1 billion a year when bus services are evaporating and young people are losing their concessions? And how will it go down if London is still spending on ‘nice to haves’ like the Routemaster replacement, when frontline transport services in the next tier of major cities are being cut? The way in which the coalition in support of retaining BSOG came together so quickly was also encouraging. Usually it’s very difficult to get much interest in the media, or from other organisations, on bus policy issues – but here in a matter of weeks we had environmental groups, trade unions, CPT and pteg all fully behind it -and getting coverage in the national press. That also sent a message to Ministers that buses might not be as politically invisible as perhaps was once the case.

There is a risk of excacerbating the already large funding gap between London and the North and West Midlands

Avoiding a ‘perfect storm’

So how could Ministers avoid some of the worst case scenarios? Firstly, there’s a need to ensure that regional balance is carefully factored into the transport spending review as a whole – to avoid exacerbating the funding gap between London and the regions. Secondly, existing subsidies (CT, BSOG and local transport authority revenue budgets) for the bus industry need to be considered in a more holistic way, rather than in silos. The cumulative effect of separately considered reforms/cuts to these flows is what will count in terms of what future bus services will look like on the ground. In the city regions we believe that the PTEs would be well placed to get better value from these flows by targeting them in a way which meets local circumstances and aspirations – rather than continuing with flat rigid national pay-out systems which inevitably results in  windfalls, under-payments and unintended consequences. However, whatever is ultimately decided on bus subsidies it should be on the basis of the cumulative impacts rather than on incrementalism and silo thinking. At least in the men who are making the decisions – Norman Baker and Phillip Hammond – we have a combination of social conscience and forensic accountancy that has the collective capability to make some astute decisions. The big question is how much wriggle room will the spending review as a whole give them to make the best use of what funding remains for local transport outside London? In the city regions the bus is still a major player in the transport market rather than the niche player or a social safety net it can be elsewhere.  Keeping it that way is about to get harder.

Jonathan Bray
This article was first published in Coach and Bus Week