In Nusrat Ghani’s first committee meeting since taking her post, the Transport Committee quizzed the DfT on its bus policies, in relation to guidance, funding and concessionary fare reimbursement. Madaline Dunn reports
The Transport Committee held an evidence session for its Health of the Bus Market Inquiry on 13 February, where the Committee sought to understand the Department for Transport’s (DfT) policies for buses. The scope of the inquiry included the effectiveness and ambition of DfT’s policies on buses, factors affecting bus use, bus services in rural and urban areas, the sustainability of bus services and regulations affecting the provision of bus services. In attendance at the inquiry were Nusrat Ghani MP, Parliamentary Under-Secretary of State for Transport and Catriona Henderson, Head of Buses and Taxis, Department for Transport. [wlm_nonmember][…]
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A national bus strategy
The first question raised in the inquiry concerned the introduction of a DfT lead national bus strategy. Chair of the Committee Lilian Greenwood noted that based off the evidence received by the committee, there should be one in place, and enquired as to why there was not one.
Nusrat Ghani, responded by expressing that the main issue involved timing and vision, and that, it would be unfair for DfT to be wholly responsible for bus services up and down the country. Developing upon this, she noted that she supported the introduction of national strategy at the right point, with all of the stakeholders and local authorities involved.
Lilian Greenwood highlighted that such a strategy would allow for consistency throughout the bus industry. Nusrat noted in response that the bus strategies pushed out by local authorities, along with their role and responsibilities should not be ignored.
The impact of the Bus Service Act 2017
Speaking about the impact that the introduction of the Bus Service Act 2017 has had on the industry, Nusrat said that the Act now enables local authorities to have stronger partnerships with bus companies. In turn, she noted there was the possibility for more enhanced partnerships working with Mayoral authorities. She added that the Act also encourages authorities to make information more transparent and take a more holistic approach when making changes to bus services.
Nusrat noted that the wider implication these changes was the improvement of bus patronage, which has seen a decline since the 1950s, in comparison to a 1,000% increase in people using other forms of transport. She suggested that through better partnerships, issues around congestion and the timings of journeys would be improved through better management, ultimately making the bus a more attractive transport option.
Catriona added that the DfT were still making the legislation within the act, and added that it would be making regulations later in the year. She noted that so far a number of mayoral combined authorities were contemplating the act, and a number of authorities were exploring the next steps. She used the example of the Mayor of Cambridge and Peterborough, who had undertaken a big review of bus services. Another example that Catriona used was Transport for West Midlands (TfWM) which is working on an enhanced partnership for its new Spring network for the Commonwealth Games. She also noted that all of the legislation has a five year post implementation review clause.
The committee asked the witnesses what the measures were by which it would review the success of the Act. Nusrat responded that bus passenger increase would be the fundamental measure, as well as making sure the services were both dynamic and accessible catering for a range of ages.
Nusrat was then pressed on what the Department was doing to make those things happen. Nusrat said that extra powers were being given to local authorities to make sure buses run; it was also encouraging low emission buses, smart ticketing and open data.
Bus partnerships
Committee Member Robert Courts went on to ask for a definition of a Voluntary Bus Partnership, to which Catriona Henderson replied that it was essentially a voluntary agreement between a bus company and local authority. She went on to note there were also statutory partnerships that acted as a contractual framework, which were useful when there wasn’t trust between the operator and local authority.
Nusrat added that 20% of operators were in some kind of partnership, most of which were voluntary. Nusrat mentioned that Liverpool has a bus alliance, and since its introduction there had been an increase in passengers paying fares by 16%.
Regulation
Committee member Huw Merriman enquired why the bus market is not regulated the way the rail market is. He claimed that while train operators largely pay for themselves with fares, without subsidy, in the bus market, of the £5bn operator revenue; £2bn comes from the public sector and £3bn from fares. He asked the witnesses, considering so much money goes into the bus market, why is it not regulated. He also went onto ask why so much control was in the hands of the operators, for example their ability to cut rural services and raised the point that the legislation is so ‘piecemeal’ that it disables the government from forcing a company to operate in a rural area.
Catriona noted: “Road is just very different, road space is much more flexible in its use and that means government doesn’t need a role like that in relation to buses.”
After Nusrat made the point that the new Bus Services Act placed more power in the hands of the local authorities to determine how bus services are run, Huw Merriman contested this. He noted that the Bus Services Act took away the power of the local authorities to provide bus services through municipals, limiting them. He went on to ask why the DfT does not instruct operators where socially necessary stops are needed. He asked if the DfT would look at providing a framework of socially necessary routes companies must operate in.
Catriona responded by saying that reciprocal consultation powers would be necessary for this to go forward.
Bus patronage
The Chair proceeded to ask what further steps the government was taking to increase bus patronage. Nusrat responded that the department has been putting extra funding into buses, including that which is part of the Transforming Cities Plan, which has seen a total of £1.8bn, to help local authorities with transport plans.
When asked about competition for and distribution of funding, the witnesses were asked if competing meant greater differential in quality, variety and accessibility of services between different towns. Ruth Cadbury noted: “Those who compete well, get the money and therefore provide more dynamic forward thinking services and those who don’t, don’t and we just get a widening gap between different local authorities, because of that competition culture.”
Nusrat responded to this noting: “Government support for bus services is over £2bn, that’s 12% more in real terms, than under the 1997-2010 administration. So, funding is going up, with the concessionary bus budget over £1bn that covers 10 million people.” She added that £250m goes into buses locally, and £40m into local authorities.
The witnesses were asked what they were doing in terms of challenging local authorities and bus operators. Catriona replied that the DfT has worked to champion the voice of passengers who have expressed that open data and accessible information would help them to improve journeys. She added that it has also been working with areas to support the delivery of bus partnerships. She gave the example of Hertfordshire, where the DfT has acted as an ‘honest broker’ supporting both the local authority and operator.
Profitability
When asked about the effectiveness of the funding framework Nusrat said that BSOG should be reviewed.
In terms of bus profitability, Catriona said that operating margins are flat, and the variations outside London are between 8-11% and that profitability is around 8.6% before the financing attached to vehicles.
The committee expressed that BSOG is discouraging investment in electric buses. Catriona claimed that electric is double the cost of diesel, but that it is offset by cheaper running costs, and with ULEZ grants there is a good financial basis for electric buses. At the UK Bus Summit a £48m fund was announced for 263 low-emission buses the vast majority of which are wholly electric.
Speaking about reaching government targets on carbonisation and air-quality, Nusrat said: “A lot of people make conscious decisions about air-quality – we now have much more cleaner and greener buses.”
Cuts to rural services
The Committee also raised the issue of cuts to rural bus services and evening and weekend bus routes. One of the committee members asked what the policy was on unprofitable but socially necessary routes.
Nusrat responded to this point by noting that there is substantial funding made available to local authorities to support bus services. She added that it was a decision made on a local level, but she had been in contact with local authorities and bus companies to see the developments being made.
When asked whether funds that are allocated are dedicated funds or come out of the local funding pot, Catriona noted that some are ring-fenced and some aren’t. Catriona pointed out that the Operators Grant is ring-fenced; with over £40m funding each year, for England and outside London, what remains is passed through revenue support grants covering concessionary fares, which is not ring-fenced.
Nusrat added that the local authorities grant which stands at £46bn is not ring-fenced, which is why changes to routes is down to local authorities.
Huw enquired about the number of days’ notice required to stop a service. Nusrat replied 70. Huw added that perhaps the same approach should be taken as that with pubs, where due to their community value, six months’ notice is required.
Catriona added that the operator had to notify the local authority of a change to services so that if they wanted to tender for that service because it was socially necessary, it could request financial information from the bus operator to have time to make a decision.
Nusrat also alluded to services like ArrivaClick as a possible alternatives to rural bus services. The committee responded by saying that passengers were unable to use their concessionary bus passes, and enquired what the department were doing about this.
Nusrat expressed that it would be an issue for the local authorities to look at, but did point out that other issues with the service were based around technology, which restricted passengers, as some passengers would not have access to a modern phone, or a debit and credit card, concluding that there were issues that needed to be ironed out.
Catriona added that part of the Department’s work on the future of mobility included a regulatory review over the transport sector, looking at buses and whether existing regulation covers ArrivaClick and other services like that.
Concessionary fares
The Committee highlighted that in the English National Concessionary Travel Scheme, there was a shortfall of £650m in the funding of concessionary fares.
Nusrat questioned this expressing that £1bn was spent on concessionary fares, and local authorities can take that forward if they wish. She also claimed: “Local government funding has increased.”
The committee responded by asking if the department had considered the merits of allowing concessionary bus passes to be used on other forms of transport.
Nusrat replied that this was up to the local authority to work with community transport operators. She added that 37 out of 89 travel concessionary authorities offer freedom to use concessionary fares.
Traffic management
Nusrat was asked about why the department had declined a request for a cap on private hire vehicles. She noted that there was further consultation to be had and added that the number one issue highlighted at UK Bus Summit was that congestion and journey times were the biggest thing putting people off buses. The speaker enquired as to whether better traffic management should be demanded.
Catriona said that was an area of new technology and most places have some urban traffic management centres, some better than others. Nusrat again referenced Transforming Cities which would be continuing to challenge people’s perception and suggested that this would help with movement on how traffic and congestion is managed.
Nusrat added that 12 city regions had been shortlisted for the Transforming Cities fund: Derby Nottingham, Leicester, North East Combined Authority, Norwich Plymouth, Portsmouth, South East Hampshire, Sheffield city regions, Southampton, Stoke-on-Trent, West Yorkshire Combined Authority, Preston and SouthEast Dorset. She noted that these places will have an improved system in place to manage traffic and congestion.
Nusrat noted that there is concern that some places are being ignored, and that the same places seem to be getting funded. Catriona referred to the ‘Transforming Cities’ fund however, noting: “We structured the competition there is slightly a different way,” she continued, “If you tell us what your vision is and we select you, then we’ll work with you, well do some co-development on how you do the investment.”
Competition
The committee raised the issue that in some areas of the country, one of the big operators has a monopoly and there is little room for head-to-head competition, and asked if the Department had a view on this.
Nusrat replied that by raising standards, people would be encouraged to enter the market, as it would be seen as a good way to provide service and profit, which the department hoped they would reinvest in their buses. Nusrat used the example of The Big Lemon service in Brighton, to demonstrate that if space is created for other companies, what is locally provided can be broken up and divided.
Catriona added that what mattered to passengers was that the operators were responsive to their needs and that the Act was less focussed on competition in its own right and more focussed on how to get the best outcomes for passengers irrespective of competition.
Ticketing
The committee also discussed the issues around ticketing. Nusrat said that open data changes the way that customers can access information and how they can use it, and that the bus operators need to change and give the passengers what they want.
Catriona added: “The problem for the industry recently has been that there is no standard for publication of fares, so there is no consistent methodology for doing that.” She told the committee that the government is funding a project to create a consistent data standard called Netex, which will allow them to have part of the open data network to deliver information on fares and tickets. Catriona noted that the government’s consultation said that bus companies will have to publish simple fares data by 2020 and complex fares data by 2022.
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