No additional help for coach industry, despite fears of insolvency, says Baroness Vere

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Candice Mason of Masons Coaches was one of those giving evidence. RICHARD SHARMAN

At the latest meeting of the Transport Committee on Wednesday 24 March, expert witnesses put forward the ongoing case for sector-specific help

In a meeting of the Transport Committee held at Westminster and via teleconferencing on Wednesday 24 March, a number of figures representing the interests of the coaching sector made its plight known. However, it was made very clear by Transport Minister Baroness Vere and Tourism Minister Nigel Huddleston that no additional help would be forthcoming to the coach sector, beyond what has already been made available.

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At the evidence session, chaired by Huw Merriman MP, CPT Chief Executive Graham Vidler was the first to give evidence, followed by Candice Mason of Mason’s Coaches, Mick Pearson of TM Travel and Nigel Skill of Skills Holidays. Also present were former Transport Select Committee Chair Lilian Greenwood and SNP Shadow Secretary of State for Transport Gavin Newlands.
Huw Merriman opened the meeting by referring to the sector’s worth to the tourist economy, bringing in £19 billion in 2019 and employing 42,000 people, before turning first to Graham Vidler, asking for an overview of the importance of the coach sector to the economy and to society.

“Coaches provide a vital means of transport which ensures that affordable, accessible and environmentally friendly transport is available to everybody across the UK,” Graham started. “Before the pandemic, British people made about 500 million passenger journeys by coach each year, and in the year before the pandemic over nine million people made at least one coach trip. That includes almost two million people taking a holiday by coach; it includes three and a half million people taking a day trip to a leisure attraction, music festival or sporting event; it includes 600,000 children travelling to school each day.

“Coach is integral to the UK’s tourist industry. In 2019 there were 23 million visits to tourist attractions, contributing £14 billion to the UK’s economy, a huge part of the tourist sector. But it’s also worth saying that those numbers, as impressive as they are, don’t tell the whole story, because coach is also about the door-to-door transport, which means that some people, perhaps older, more vulnerable and disabled people who otherwise wouldn’t be able to take a holiday or go for a day out can do so.

“Coach is also the mode of transport which steps in and keeps the nation moving when other modes when other modes of transport fall over. When there’s rail replacement, when there are flights diverted from one airport to another, coach is the flexible mode of transport that can be there quickly to get passengers to their destination,” he said, summing up the economic and social impact.

Moving on, Huw Merriman asked the operators present about the more personal effects of the pandemic on their businesses, their livelihoods and those of their employees. Candice Mason was the first to answer, and said that the effect has been devastating: “50% of our business is made up of private group travel. We transport the local MIND and Mencap groups and many local youth groups, many English language schools,” she said, “and a big proportion of our work is educational trips. 30% of our work is made up of home to school transport, which is a commercial part of the business not linked to local authorities. It has been really difficult turning the tap on and off with that. The last time we took a group booking out was 18 March 2020.” Candice said that around a further 15% of the company’s work is day trips and holidays, while 65% of Masons’ business could be directly linked to tourism.

“We’ve been really lucky to be able to issue the grant that was issued in the first lockdown,” she said, which amounted to a grant of £10,000, followed in January by a further £4,500. “We’ve had to take out a CBILS loan to the equivalent of £225,000 which we have to start paying back in June. We’re scared about how we’re going to be able to do that,” she continued, highlighting the fear of many operators that the sector simply won’t restart in time to enable the additional loans to be repaid on top of existing commitments.

Mick Pearson, TM Travel Transport Manager, gave evidence to Ministers. RICHARD SHARMAN

Mick Pearson of TM Travel (not to be confused with the bus operator of the same name based in the South Yorkshire and Derbyshire area) echoed Candice’s comments: “To keep up with government expectations we’d not long taken on three Euro VI coaches. The finance on those is £20,000 per month. Any grants or loans that we have been able to get has just scratched the surface of the finance. It wasn’t enough. I don’t think there’s a clear outline for our sector to get going. Last year when we tried to organise trips to try and generate income, another lockdown came.”

Turning next to Nigel Skill, who is the fourth generation in the firm and whose company operates around 115 coaches, the Committee heard a similar story: “We are estimating our losses will be somewhere in the region of £3.2 million as a result of the pandemic. A lot of that is down to the fact that we have embraced government legislation and invested heavily in Euro VI vehicles. We have invested £90 million in Euro VI,” he said.

Survival of the fittest?
“I often hear that it is about survival of the fittest but I suggest that is counter-intuitive because the businesses that are vulnerable at this time are the ones that have embraced Euro VI and invested heavily,” Nigel continued. He said that it is not just the purchase cost but operating them, and his company has invested £500,000 in workshop facilities as well as employing the skilled people needed to maintain them. “The danger is that those companies who have embraced this are more vulnerable than any. Those who haven’t are probably in a financially stronger position. It is those that are forward-thinking and well-managed that are suffering disproportionately.”

Asked to put numbers on the downturn in terms of vehicle use, Candice Mason said that from her fleet of 19 coaches, only those carrying out school work had seen use: “Between April and December of 2019, we transported just over 70,000 passengers,” she said. In the same time frame in 2020 it was just over a thousand, and mileage had seen a similar nose-dive. Candice said that the company had been using expensive, high-end vehicles on some work to prevent them from sitting idle and help maintain them in good working order.

Nigel Skill said that at the low point, the company had been operating just one minibus, rising to around 40 for school services when lockdown eased. “That’s almost a double-edged sword,” he said, “because school runs are only morning and afternoon. Our business model is predicated on using school vehicles to infill with private hire work. It is almost a double-whammy for us that we are operating these school runs but not making money. You could almost argue we are losing money, so it’s not really helping the situation.”

Mick Pearson said that only around a third of his fleet had seen use on home to school work, with the expensive vehicles not moving since March last year.

Looking more closely at the support provided and its impact, Mick said that as the support depended on rateable value, his company had initially been turned down due to sharing a yard with another operator, and when it was made available it was spilt 50:50 with the other operator: “Before the bounceback scheme was announced, we went to our bank for CBILS. We had a £1.3 million turnover pre-pandemic, and were turned down. It was only when the bounceback scheme was announced that we were able to get the maximum £50,000 allowed by that but with the finance payments we still couldn’t stand on our own two feet,” he said.

The cost of money
Candice Mason said that pre-pandemic, Masons had invested £1.5 million into Euro VI and £400,000 in PSVAR. “We would like to see the same as Scotland has had, a grant against the investments we have made. We took some finance holidays in the first three months to give ourselves time to plan, but that has cost us £20,000 in interest rates.” Candice continued by explaining that she had looked to re-finance, but been turned down as the company was deemed to be too high a risk. “We have a viable business,” she said. “We have customers waiting in the background ready to go. But there is a lead time and we need to make sure venues are ready and to market that trip.” Candice said she expected it to take a year to return to an even keel.

On the issue of grant support, Nigel Skill said that he was grateful for the furlough scheme and the small level of support from National Express towards those commitments. However, he said that applying for CBILS had been a costly exercise. “We put together a proposal that we needed £2.5 million of CBILS loans. They suggested that we would have to have that independently audited so we brought in PwC. That cost us £15,000. They recommended we should have the £2.5 million loan. The bank would only advance £2 million.” A further application for the remaining £500,000, coupled with a revised costing by PwC, meant that the company ended up paying almost £50,000 to apply for CBILS. “That is £50,000 that we cannot afford.”

Scottish Example
Commenting on the Scottish scheme, which is targeted at businesses with a high proportion of their business from tourism, is tapered towards those who have invested, and pays up to £12,000 per vehicle, Graham Vidler said that it showed the Scottish Government was putting coaches at the heart of a tourism recovery in the country. “It is a really good scheme. We think applying it in England and Wales and a similar scheme in Northern Ireland would cost between £100 and £150 million and be a real boost to the sector,” he said.

Both Candice and Mick went on to explain more around the allocation of money by local councils, much of which they said had gone primarily to local bus companies to support home to school services. Nigel Skill said that he had seen a similar pattern, but in his company’s case the money came to it via FirstGroup, for whom it is a subcontractor.

Graham Vidler explained: “The funding for home to school services was given to local authorities to support provision in their areas, they then made decisions about where that money should go. I think it was potentially a mistake to present it as support to coach operators. It was support to local authorities. Surveys suggest about 20% of it found its way to coach operators.”

Asked what would be needed to start to move forwards, Candice Mason said that being able to turn over sufficient to pay finance bills would be a good start, and that the CBILS money would run out in June, meaning a tight deadline to restart some form of operations.

Nigel Skill of Skills Holidays gave evidence at the hearing. RICHARD SHARMAN

Nigel Skill noted that bookings for his company’s tour programme had been encouraging, but that had been the case previously, only to have to offer refunds as the second lockdown was imposed. “A roadmap that is clear and stuck to will be a help for us,” he said. He also expected the firm’s National Express work to ramp up quickly. “The only certainty we have is that we have to keep paying the finance.”

Day out to help out
Asked what the Government could do to ease the bounce-back, Graham Vidler responded: “A scheme along the lines of ‘eat out to help out’ would clearly stimulate demand, and VAT relief would help as well. But fundamentally alongside any financial incentive is clarity and consistency around the roadmap out of lockdown,” he said, and added that a return to full capacity was also needed.
Candice Mason said that she felt that a VAT reduction would not make a significant difference, but having voices from the Government standing up and encouraging people to use coaches would.

“VAT will not make much difference to us, to be honest. It doesn’t really touch the sides. I have been asking, since the very first lockdown, for somebody from Government to please stand up and say — it will take 30 seconds and won’t cost anything — ‘Coach travel is really great. It is really green. You can have a really fun time. It is really safe.” She also re-iterated that venues have a part to play too, and that there needs to be some kind of consistency in approach, as well as engagement by venue owners to allow operators to plan and book ahead.

Picking up on some of Candice’s comments, Lillian Greenwood asked about the importance of long-established relationships within local communities, especially with older and vulnerable passengers and groups. Candice highlighted the importance of coach’s door-to-door offering, and the much more personal service which builds trust. Mick Pearson emphasised the impact on those who might not otherwise be able to get out, because of financial or physical constraints.

Graham Vidler added that as much as 40% of the industry could be at risk of it doesn’t see improvement, with a significant impact at local level. Asked about the environmental benefits, he said that the CPT estimates a 15% increase in the number of journeys by coach would take around 47 million car journeys off the road and save half a million tonnes of carbon dioxide per year. Persuading a relatively small number of people to leave their cars behind for a relatively small number of journeys would have a significant effect, he said.

Ministerial Response
The response of the two Ministers present provoked some subsequent strong comment on social media. Baroness Vere showed sympathy to the plight of the industry, and recognised that it has not been possible for the Government to save every job and every business, but was unable to offer more concrete help, pointing to the assistance already available through the furlough scheme. “We are in a very difficult situation. We recognise the absolute value of the coach sector. It has a huge impact on tourism. The Government have had to make some very difficult choices. From a transport perspective, we have very much had to focus on public transport and providing public transport for essential workers so that they can continue to make their essential journeys throughout the pandemic.”

Minister Huddleston was asked how he felt his Department has fared in terms of giving it as much targeted support as has been possible. He showed equal sympathy with the problems facing the sector, expressing concerns that some of the measures made available, in particular the additional restricted grants, have not been taken up or distributed in the way that he would like to have seen.

“There is lots of enthusiasm for coach travel. With the environmental agenda and environmental tourism being increasingly important, it will be even stronger. There is no doubt that the sector has been hit hard. Every time there is a global crisis, whether it is terrorism or a medical crisis, tourism is hit incredibly hard, but it bounces back every single time. It bounces back strong because the global trends in people having more disposable income, both domestically and internationally, are strong,” he said.

“While I am comfortable that we fought as hard as we could to get significant amounts of support for tourism, believe me I would have loved to see even more. However, there are some mechanisms. There are now £2 billion-worth of additional restrictions grants. They are meant to go to the coach sector. Coach sectors should be getting those grants. Local councils should be distributing additional restrictions grants to the coach sector. I have said that in the House of Commons.

“It alarms me that I am hearing that some local authorities have not distributed additional restrictions grants to coach operators. I could not have been clearer. They are meant to be included. They should be getting grants.”

Euro VI and PSVAR
After further discussion around funding, the conversation moved to debt and the onus placed on the industry by PSVAR and Euro VI requirements. With regard to Euro VI, Baroness Vere answered: “The upgrade to Euro VI is something that is not going away. It is going to continue, and we would expect coach companies, when they refresh their fleets, to look for the lowest emission vehicles possible. That is because they are the vehicles of the future, and they are the ones that will be able to go into clean air zones for no charge. Therefore, while it has never been mandated that a coach company needs to buy Euro VI, it certainly is something we would encourage because that is the direction of travel, so I think it makes good business sense.”

The session was chaired by Huw Merriman MP. PARLIAMENT TV

In a comment which will polarise opinion, she continued: “I would also like to touch on PSVAR, which is something that was mandated by Government. It was mandated by Government 20 years ago. For some reason, many coach companies took heed of the regulations and did the right thing, and some did not. This is not a new requirement. It has been around for 20 years. We have helped the coach sector by providing temporary exemptions for the PSVAR, particularly for vital home-to-school transport. On the flip side of that, I think we want to recognise that it is right that a disabled child should be able to travel to school on the same vehicle as somebody who is not disabled. There was a clear ambition behind those regulations about equality and accessibility.”

The Baroness was further asked about social distancing and whether those requirements might be relaxed for coaches, and answered that safer travel guidance remains applicable to buses and coaches. The sector will be treated in the same way that buses are, she said, and there would be no move to airline-style rules.

Asked why in that case if the same social distancing rules apply the coach sector should not receive equal treatment, Baroness Vere responded: “I think we are possibly going round the same group of houses again. Obviously, the bus sector gets money for PPE and to support the empty capacity that necessarily has to happen on public transport. The coach sector has access to the additional restrictions grant, which of course can help with the gap.”

Responding to the idea of positive backing for the sector, Baroness Vere said that she had promised Candice Mason that she would do a visit with her: “Indeed, I think I am going to get my entire private office on to a coach. We are going to go somewhere fun, to show how brilliant coaches are and the sort of accessible and comfortable journeys that they can provide. It is very much about Ministers working with the sector going forward and highlighting what they do. That is absolutely what I intend to do,” she said.

In closing, the Chair asked one final clarification with regard to the guidance on the new restart grant, which specifically and without explanation excludes coach tour operators from eligibility for the grant. Baroness Vere confirmed that to be the case. “They are excluded from restart grant funding. They are not eligible. They are included on additional restrictions grants, where it refers to group travel and tour operators.”