Council seeks to cut reimbursement rates to plug funding hole.

Bus operators in the south west have warned that significant cuts could be made to the region’s bus network if Cornwall Council goes ahead with plans to slash the compensation they receive for carrying concessionary bus pass-holders.

Last month Graeme Hicks, the cabinet member for transportation and highways, wrote to bus operators, without any warning, announcing the council’s proposals.

At present local operators receive 73.5% of the average adult fare, a level of reimbursement that cost the council £7.6m last year. The council’s budget for the 2011/12 financial year is £5.4m, leading it to propose that the rate would be cut to 44.3% and backdated to April 1.

The move led Newquay-based Western Greyhound to immediately announce that it would be forced to deregister 17 of its local services – almost 25% of its network – if the council went ahead with the change to reimbursement.

“In July 1971 there were funding cuts and the old Western National pulled out of vast swathes of Cornwall as a result,” said Western Greyhound managing director Mark Howarth this week. “Now exactly 40 years on, it appears the same thing may happen again if sense doesn’t prevail.”

Marc Reddy, FirstGroup’s regional commercial and business growth director, warned that the group could be forced to “withdraw the vast majority of our services from Cornwall”.

Tim Wood, Cornwall’s assistant head of service – transportation, told councillors last week that the concessionary fares scheme was “unsustainable within allocated budgets”. He added that the county’s concessionary fares scheme was “very generous” and faced particular pressures due to the influx of holidaymakers to the area each year.

Wood reminded councillors that operators are entitled to four months’ notice and Cornwall Council was seeking agreement from operators to retrospectively apply the reduction to help manage any overspend.
Following a meeting convened by the council last week, Hicks tabled a further proposal “so that operators’ commercial views can be recorded and serve as a baseline for further discussion”.

This would see reimbursement continue at 73.5% until October this year, then 60% until the end of March 2012, followed by a further cut to 50% until March 31, 2013. This proposal equates to expenditure of £12.7m – still leaving the council with an overspend of £1.8m.

Local operators are now examining the proposals. Mark Howarth told Passenger Transport that he was pleased that Cornwall has rescinded its original plan, but even the revised proposals will lead to network cuts.

He continued: “Between us, all operators in Cornwall now carry 13 million passengers a year, this is a remarkable increase, but all this hard work could be destroyed if careful thought is not given to the way forward.”