Tobyn Hughes warns of major financial challenges for bus network

Tobyn Hughes, managing director of Transport North East

Councillors in the north east of England have renewed calls for a “substantial say” over the region’s bus network as a result of coronavirus pandemic.

At a meeting of the North East Joint Transport Committee last week, members heard that the Covid-19 pandemic had severely reduced the number of people using bus services in the North East.

The message during lockdown for all but essential workers to stay at home led to an immediate and profound reduction in ridership, up to around 90%, and along with it an almost total loss of commercial income. This had led to urgent financial assistance for bus operators.

The effect of the emergency financial assistance has been to skew the sources of bus industry funding

“The effect of the emergency financial assistance has been to skew the sources of bus industry funding in the UK (outside London) such that almost all funding now comes from the public sector in one form or another,” said Tobyn Hughes, managing director of Transport North East.

“Prior to the Covid-19 crisis, 61% of funding came from passenger fares, 33% from local authorities and 6% from central government. Since the emergency funding measures were put in place, only 5% comes from passenger fares, 54% from local authorities and 42% from central government.”

Hughes added that co-operation between the public sector and bus operators had been constructive and performance levels had been high. But he warned that throughout the restart phase, there would be major financial challenges for the bus network, namely:

  • As the economy will reopen slowly in different phases, demand will naturally
    remain depressed;
  • Some former bus passengers may be unable or unwilling to use public
    transport for a variety of reasons for some time to come; and
  • Social distancing measures have a dramatic impact on the number of people
    that can be carried on any given vehicle. It will also impact on waiting arrangements at bus stops and interchanges.

Hughes continues: “Nevertheless given the vital role that buses play in the local economy and society, it is important that bus networks can be quickly reinstated to levels as near as possible to those seen before the crisis began.”

However, he warned about the open-ended nature of some of the funding streams that have been put in place for bus operators. He said that while the government has confirmed it will continue to pay Covid-19 Bus Service Support Grant (CBSSG) and the Bus Service Operators Grant, the future of the Local Authority version of CBSSG is unclear.

Meanwhile, Nexus, Northumberland County Council and Durham County Council continue to maintain concessionary fare and tendered bus service payments to bus operators at prepandemic levels as a result of a government request. Hughes they had some concerns as to the “open-ended nature of this request, and over the mechanism being used”.

He continued: “It may be that this is addressed by attaching certain conditions to future payments in order to address these concerns, which could include, for example, open-book accounting and joint working on network development.”

It is important that there is transparency over these payments

“As with all public expenditure, It is important that there is transparency over these payments and accountability for the outcomes achieved. Work is underway with other Combined Authorities across the country to develop a common set of conditions intended to achieve this.”

Hughes went on to note that demand for public transport was likely to be uncertain for some time as a result of factors that not only include social distancing, but also the speed at which the economy recovers; whether a ‘second wave’ of Covid-19 causes a future repeat of lockdown; confidence in public transport; and long-term changes to working conditions and social habits.

“It seems highly probable, therefore, that bus networks will continue to need
additional public funding support for many months to come, if not years,” he said. “The longterm future of exceptional government support is also uncertain at this point in time.”

In the short term Hughes recommended the North East Joint Transport Committee and its constituent authorities continue to make the case for financial support to the bus industry from central government for as long as the effects of Covid-19 continue to have a negative impact.

In the longer term he pointed to a letter sent by council leaders and elected mayors in the North East of England to prime minister Boris Johnson in early May. In it they not only sought an urgent commitment to funding to help restore public transport to pre-Covid levels, but also that “a new model for public transport is urgently needed in the North East (…) supported by a long-term devolved funding settlement from central government”.

Meanwhile, a separate letter to transport secretary Grant Shapps, signed by transport political leads from combined authorities across the UK also made a “proposal for funding for buses which would simplify and devolve funding for buses during the recovery phase by routing bus funding to transport authorities”.

Hughes recommended to members that further work be carried out into future models of bus service funding and provision, to ensure that the development of the local bus network postCovid-19 meets the long-term aims of the Joint Transport Committee.

“This work is likely to involve close co-operation with local bus operators as well as the development of options jointly with other areas of the country which are faced with similar challenges, and with the government,” he added.

However, speaking to the Evening Chronicle, Go North East managing director Martijn Gilbert said the levels of public sector support were a short-term measure only and that giving councils greater control would “add unnecessary delays and complexity”.

Speaking in his capacity as chair of the NEbus consortium of local bus operators, Gilbert added: “Bus operators, like all modes of transport, have faced the unique challenge of needing to continue to operate but with heavily reduced demand and income during this crisis, so have not been able to fully reduce costs.

“The government accordingly put support arrangements in place, just like they have for other modes such as the Metro and many other business areas.

“Transport, and specifically buses, are no different in this respect, so it’s disappointing to learn this at a time when the industry has been working so closely alongside partners such as Nexus to optimise service levels, and our drivers and other teams have been working very hard in difficult circumstances, to deliver essential journeys supporting the transport of key workers to hospitals, care homes, essential retail and more in a very efficient way, as well as continuing to respond to changes in demand at speed.”

Gilbert added that the current arrangements are envisaged as short term.

The priority for bus operators remains to work closely with local authorities

“The priority for bus operators remains to work closely with local authorities on a pathway back to delivering bus services with the record levels of investment, air quality benefits and customer satisfaction scores that bus passengers experienced in the North East before this crisis hit,” he said.

“Now, more than ever, it’s important to work together to look ahead to what a post Covid world looks like and how we can positively re-build essential services in partnership to support the recovery of the regions economy, get people back to work and improve the air quality, health and well being of our communities, all in a way that will reduce the dependency on the public funding, not increase it further and add unnecessary delays and complexity.”

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