Long-term thinking on local public transport finances needed now

THE LATEST post-pandemic support that the Government agreed to provide to local public transport two weeks ago amounts to a further holding operation to the sector’s fragile finances. Without the continuing tranches of such public funding over the past almost three years, it should be acknowledged that things would be in a much worse place than they would have been otherwise. That said, it was already the Government’s agenda to halt continuing declines in levels of bus service and patronage, and instead create a positive climate of the kind set out in the Bus Back Better ambitions document during the Covid-19 pandemic itself.

The question now is how can future financial support to local public transport best build upon the Government’s substantial investment to date? First, there is a need to stabilise the local public transport market, before creating the platform for its future positive contribution to a wide range of both transport and societal goals. Consideration needs to be given to how exactly funding is provided, as well as to the scale of the funding needed. Any reform will take time to design and implement – and it is a concern that there is as yet no real indication that such activity is underway. This means that whatever is decided for the future, additional interim short-term support is likely to be needed if a damaging shock to local public transport is to be avoided.

It is obvious that reform of how local public transport is funded is needed. The current system is complex and there are real questions about how well targeted it is at meeting both the Government’s and local authorities’ objectives for transport in general, and local public transport in particular.

The recent report from consultant, Steer, to the Urban Transport Group on this topic contends that the ‘one size fits all’ approach for bus funding outside London no longer seems appropriate in what is a diverse market. Such funding should surely be an integral part of strategies for local transport more generally, and to ensure the bus, and other rapid transit equivalents, play the role that such strategies envisage for them. This means an appropriate scale of revenue and capital support to match both the local transport authorities’ and Government’s ambitions for local public transport.

The pre-existing model for bus operation is now substantially broken. It looks as if public patronage will not recover fully to pre-pandemic levels, at least in the short and even medium term. This means something must change to fill the income gap if anything like the current service levels are going to be maintained, if not improved upon.

As our analyst, John Siraut, explores in this issue, all the available data shows that the bus industry has continued its long-term steady decline in most parts of the country over the past two decades. It is difficult to see what will turn round its fortunes post-Covid, from which its recovery has lagged that in private motoring.

The £2 maximum fare project seems to have had some effect – at least in marketing terms – but it is not clear which combination of price, extent of provision, service quality and pressures placed on other modes to influence their relative attractiveness, could make a real difference to the appeal and use of buses.

There is some evidence that local demographics, social and economic conditions and patterns of activity, plus strongly committed sustainability-directed transport policies and measures are the only influence that has made a significant impact on usage levels in recent decades. With certain areas – particularly free standing prosperous traditional towns with sustainability-minded leaders – seeming to be more fertile territory to attract bus use.

There may well be lessons to be learned from the types and packages of policy that genuinely deliver a positive model for buses – and the way that forward-funding buses from traffic control policies like parking and congestion charges can support the necessary measures to get in place genuine alternatives to the private car.

Regrettably, there is a relative dearth of suitable bus travel data compared with that for rail, especially linking patronage and commercial performance to different contexts or initiatives.

Even before the pandemic, it was apparent that there was a need to reform bus funding. In Bus Back Better, the Government committed to consult on reforms to the Bus Service Operators’ Grant (BSOG). In the Steer report for UTG, a number of reform options are explored and the likely pros and cons of these. They include changes to both BSOG and the National Concessionary Travel Scheme (ENCTS), and a consolidated and revised BSOG/ENCTS package, although it is recognised that this would be more complex and extend reform timescales.

Suggestions include reform to BSOG to provide a per bus km grant or a per bus passenger grant, or to provide a context-specific grant to operators based on either per km or per passenger, depending on the objectives of the Local Transport Authority. Other ideas floated are to replace BSOG and move to a needs-based formula, and/or reform ENCTS to a payment per passenger based on contribution to social objectives, or to reform both BSOG and ENCTS to create a single funding system which supports operational costs. In all these concepts the need for multi-year settlements, e.g. five years, is stressed whilst pump-priming funds and competition funding are regarded as having at best an additional role to a reformed BSOG/Bus Support Grant system.

Allowing for consultation, the Government’s consideration of responses, drafting and then adopting new regulations and then putting systems in place, it will take time to move from design through consultation to implementation.

The more complex the reform, the longer will be needed. The three-month extension of emergency funding beyond March 2023 cannot possibly create time for this to happen, especially in the context of the late running DfT initiative to reboot the Local Transport Plan process, for which the guidance to local transport authorities is still yet to be issued. The way forward might be a short-term reform as an interim settlement, while proposals for a more comprehensive reform are developed. Whatever way forward is chosen, the need for reform is undiminished.

To be meaningful, any consultation on future reform options also needs to set out the future scale of the funding likely to be available, both from the Government sources and other local revenue-raising measures, including new ones, were they to be available and adopted by local transport authorities.

Covid-19 has led to unprecedented impacts on the way we travel. Despite that, two years ago in March 2021, the UK Government published Bus Back Better, as the national bus strategy for England. It recognised the economic, environmental and societal benefits that the bus brings and set out the central aim of getting more people travelling by bus – first, to get overall patronage back to its pre-Covid-19 level, and then to exceed it. These goals were reiterated in the Government’s subsequent Levelling Up White Paper, which sets a goal that by 2030 local public transport around the country will be significantly closer to the standards of London, which means more frequent, more reliable, easier to understand and use, better co-ordinated and cheaper services than people experience now.

Integral to the Bus Back Better agenda are the “Enhanced Partnerships” between councils and bus operators, which set out how they will work together to grow patronage and “Bus Service Improvement Plans”, which include councils’ proposals to improve bus services through greater bus priority and the like.

These include the franchising measures already being implemented in Greater Manchester and under active consideration for Merseyside and South Yorkshire. Though one question these approaches obviously raise is the level of commercial risk that would henceforth fall on the Local Transport Authorities rather than the operators, with some commentators suggesting that it is a potentially expensive and unpredictable financial equation that they will be becoming responsible for.

The core challenge is to break the so-called vicious circle of decline. Using Urban Transport Group’s Metropolitan Bus Model, Steer assessed the impact of the cuts that would follow the end of post-pandemic Government support to be potentially as great as the longer term impacts of Covid restrictions themselves, with patronage declining to around 70% of its pre-Covid levels and the network to about 75% of its pre-Covid size.

Although such an outturn has been at least temporarily avoided, we are still in a period of serious future uncertainty that puts at risk both the Government’s Bus Back Better and Levelling Up White Paper ambitions and the opportunities for the new generation of Local Transport Plans to properly deploy bus transport within the required wide strategies.

To combine both the long term and the immediate challenges, it would seem essential that something like the present package of financial support must continue for at least another year. That would allow for a hoped-for further recovery of demand, whilst giving local transport authorities time to get their Enhanced Partnerships in place. And also bring their LTP strategies to fruition with the goal of levelling-up and decarbonising the country’s transport network, and enabling buses to support other wider economic, social and environmental policy goals.

Peter Stonham is the Editorial Director of TAPAS Network

This article was first published in LTT magazine, LTT864, 6 March 2023.