A second report also shows that revenue support was much higher and patronage decline much greater during prior to regulation
A new report written by The TAS Partnership has calculated the cost implications of providing a London-style bus network in whole of England.
The report estimates that the full annual cost of delivering ‘a bus service equivalent to that in London’ could be as high as £3.2bn a year – £70 per head of the population. This would be the result of using London-style procurement, revenue risk, vehicle and service standards and offering comparable network coverage, according to report writer and TAS Non-Executive Director, Chris Cheek.
The report stated that this is around £1.54bn more than the annual expenditure on buses under the current regime, which was stated to be £1.68bn.
Another finding was that bus operating costs would increase in the future, due to less robust cost management, ‘levelling up’ of employment conditions and wage rates and increasing pension cost. It was stated that this could add between £387m and £616m per annum (3% to 4.4%).
The report also said that improving vehicle standards to London levels of specification would cost £92m per year, eliminating the price differential between PTE areas and London (estimated at 14%) would cost £75m a year, and enhancing timetables to something similar to London hours of operation would cost £388m. A more extensive increase to provide a ’bus service like London’s’ could cost as much as £722m per annum.
The report also commented on profit levels in the industry. It said that since target profits are determined by return on capital employed, there is little chance of any changes as a result of a switch to a London-style tendering regime, and ‘there is therefore no prospect of using ‘excess profits’ to fund ‘improvements’ to bus services.’
The report stated: “Confusion about profits arises from how buses are financed – which affects company accounts. The revenue which has to be raised from fares or a tendering authority will be the same whichever financing method is used.
“Different accounting policies mean that operating profits and margins appear to be lower when buses are acquired on operating leases – as is common practice for tendered networks.”
The report builds on two earlier pieces of research undertaken by TAS in 2003 and 2004, which assessed the estimated costs of a London-style bus network in the PTEs and the shire counties. While these two reports were carried out on behalf of the DfT and CPT with full cooperation from all the PTEs and TfL, this new report was originally commissioned by Stagecoach and not conducted with a similar consensus. The new report does however use data which was not previously available for the earlier reports, such as an assessment of network density.
TAS also published a second report on pre-deregulation PTE performance, which aimed to provide a comprehensive look what happened to costs, revenue, patronage, size of operation and revenue support in the period from 1974/75 to 1985/86.
It found that over the period, bus patronage in the PTE areas declined by 20%, as fleets were reduced by 29% and over 6,800 jobs were cut. Despite huge fares increases, revenue fell by 15% in real terms, but operating costs rose by 4%. Revenue support grew by 65% to reach £267.5m (£725m today). Last year, the PTEs spent £122m on revenue support.
Commenting on the report, author Steve Warburton said: “It is certainly not the case that falls in passenger numbers started with deregulation, as some like to pretend. Indeed, passenger decline was much greater proportionately in the 12 years from 1974 than in the most recent 12 year period.”
Responding to the reports, Jonathan Bray, Director of Pteg, said: “TAS is well known as one of bus deregulation’s most fervent devotees but even with that in mind their latest efforts really are nonsense on stilts.
“The £3.2bn cost of bus franchising they claim in their latest report is based on something that nobody is planning to do – which is to reproduce London levels of bus service throughout England, from Lands End to rural Northumbria. Even using a premise that nobody is considering, to get to the suitably scary number of £3.2bn TAS is forced to systematically underestimate the returns that bus operators currently extract from their local monopolies under bus deregulation, and pile on a whole series of biased assumptions about cost increases from bus franchising which bear no relation whatsoever to the only current detailed proposition we have on bus franchising – which is in Tyne and Wear.
“Its second report, which paints the worst picture it can manage of the pre-deregulation era, also misses the point as nobody is proposing to reproduce the system of bus provision that existed over 30 years ago.”
INFO
The full reports are available online from www.taspublications.co.uk
