Welsh bus market could drop by a quarter

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Wales’ largest operators claim the cut would force them to reduce their services by 25-30%

Councils in Wales are warning they have no money to rescue services which bus operators will deregister if the Welsh Government goes ahead with a planned 37% concessionary fares reimbursement cut, the Western Mail has reported.

Managers claim the Welsh bus network could reduce by a quarter in the next few months.

First Cymru said it would have to look at reducing its services by 25% to 30% if the Welsh Government decides to reduce the concessionary reimbursement from 73.59% of the average fare to just 46% from April 1. This proposed cut follows a 25% drop in grants to bus operators and councils over the last two years which resulted in First Cymru reducing many services in the greater Swansea area.

Stagecoach South Wales said the company had applied the future 46% reimbursement rate to its costing model.

“The end result would be that we would be operating 25% less on commercial routes from the end of March than we are currently doing,” said MD John Gould.

“As far as tendered services go, that’s subject to us going to each local authority and negotiating with them.”

Legal challenges to the cut are likely, because the law requires the government to reimburse operators by an amount which leaves them no better or worse off than they would be if the scheme did not exist. However, the Welsh Government did not mention the 37% cut to operators until October, more than six months after the bus industry asked to start negotiations over the scheme’s future. This leaves too little time for legal challenges to be resolved before the deadline when bus companies must notify the Traffic Commissioner and local authorities of the service cuts they will make by April 1.

A Welsh Government spokesman said: “We are currently in negotiation with bus operators and local authorities on the terms for concessionary bus travel reimbursement for 2014-15. No decisions have yet been taken.”

First Cymru’s main services in south Pembrokeshire – linking Haverfordwest to Milford Haven and Tenby – are now threatened because high proportions of the passengers are pensioners on free passes. Also vulnerable are extensions of urban services to outlying communities.

Justin Davies, MD of First Cymru, said: “We will be handing back tendered services to local authorities, because when we bid we took the revenue risk. The pensioner will still be turning up at the side of the road but they will be worth a lot less in reimbursement. We will say to the local authorities, ‘We can’t do this any more’ but they’re already reducing services anyway.”

Chairman Richard Cope said: “Faced with unprecedented financial pressures, many local authorities are looking at options to reduce their overall expenditure. Proposals to reconfigure, cut, reduce or modernise all levels of council service provision are being considered.

“It is therefore unlikely that local authorities will be in a position to support additional bus services through their own funding.”

A spokeswoman for Arriva Buses Wales said: “It will become almost pointless having the concession of free travel on buses for concessionary pass holders if there are fewer buses, or even no buses, for them to catch.

“Any reduction in the amount of reimbursement paid to operators in lieu of a fare for journeys undertaken by concessionary pass holders will have an effect on the levels of service which bus companies, big and small, can provide. The concessionary fares scheme is, after all, a subsidy given by bus operators to the Welsh Government.

“The reduction in the level of reimbursement recently quoted would have a very serious impact on service levels across the whole of Wales and will not only put jobs at risk, but put levels of investment under scrutiny as well.”