ATCO Survey: Greater challenge for socially necessary bus services, despite falling costs

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Body says rising costs of concessionary fares are reducing the true funding that the industry receives

Costs of replacing local bus contracts have fallen for the sixth consecutive year, according to the results of the Association of Transport Co-Ordinating Officers (ATCO) 2014 Price Expenditure and Competition (PEC) Survey.

The 17th annual PEC survey claims that the cost of replacing local bus contracts fell by an average of 2.9% in the past 12 months.

75 out of 130 Local Transport Authorities outside London responded to the survey, representing a 58% response rate from authorities covering 61% of the total population of England (outside London), Scotland and Wales.

Findings include:

  • Last year local authorities said that in order to maintain existing levels of support for socially necessary local buses, budgets would have to increase by an average of around 4.4%, whereas in practice local authority budgets were reduced by 2.9%;
  • 36% of local authorities overall said they will cut services by March 2015 in order to stay within budget (up from 26% last year);
  • 18% of authorities reported a decrease in the rate of de-registrations compared with last year. The number of authorities reporting an increase in the rate of de-registrations was 20%. Overall, 62% of authorities reported that the rate of de-registrations was about the same as last year;
  • The average rate of local bus service de-registrations since April 1, 2014 has increased marginally;
  • The local authority spending cuts are offset in part by the continuing falls in contract prices, but formerly commercial services also meet social needs leading to pressures for authorities to support replacement services which often cannot be achieved;
  • Costs of replacing school transport contracts fell by an average of 3.1% in the past 12 months to September 2014, for the eighth consecutive year, with local authorities estimating that they would need 2.1% budget growth to retain existing school transport service levels; and
  • The cost of replacing SEN transport contracts fell, again for the eighth consecutive year, by an average of 3.2%, but local authorities estimate that they will need 2.5% budget growth next year to retain existing SEN transport service levels.

ATCO Performance Group Chairman John Carr said: “At first glance there may appear to be good news. However, the reality is that continuing swingeing cuts in local authority funding decreed by the Government – apparently without detailed analysis of the impact on the public – mean that authorities just cannot afford to support all the services for which there are real social needs.

“A particular concern is that the cost of concessionary travel largely determined by the Government itself continues to rise and must be paid as a first call on transport budgets. This leaves even less money to support bus services.”

Chairman of ATCO Bus Executive John Pope added: “The sting in the tail is that operators are really squeezing their margins to keep prices as low as possible year on year. We know that this has knock on effects such as keeping old vehicles for longer so the quality of service inevitably falls as well.

“As commercial bus services may be reduced too as operators face up to their own cost pressures, the travelling public are faced with a double whammy which neither authorities nor operators can avoid.”

ATCO has also published the results of the 2014 Benchmarking Survey, which was carried out for the seventh consecutive year with 87 out of 130 authorities responding. Key indicators from the survey include:

  • Annual spend on local bus services per head of population over the last eight years has fallen only by 5.6% to £5.70, although the peak was £6.74 in 2011;
  • The cost of concessionary travel paid by local authorities over the last eight years (principally for pensioners) has increased by 40% to £76.44 per qualifying person;
  • Education and SEN transport costs per pupil were £807 and £4,366 respectively, around 24% and 18% higher than in 2007.

Chairman of the ATCO Education and Specialist Transport Executive, Ian Gwenlan, said “Although both authorities and their contractors have continued to devise innovative approaches to meeting requirements whilst controlling costs, inevitably we cannot continue to meet the same levels of service within ever reducing budgets.”