There are so many unknowns in the world of public transport, like future ownership, passenger numbers and government policy

Will Boris Johnson’s successor share his enthusiasm for public transport?

I remember at school scratching my head while trying to work out quadratic equations. There seemed to be just so many unknowns: x, y, z. Where were the numbers?

And now public transport here in this country finds itself settling into some sort of abstract equation, populated by unknowns and this time without an answer you can look up at the back of the book.

The ‘x’ in my equation concerns the big transport operators. For really quite a long time, we have had stability not just in terms of ownership but also in terms of policy approach. Go-Ahead has been regarded as the most forward looking when it comes to the environment, Stagecoach were bitterly, almost fanatically opposed to anything that unpicked the 1986 deregulation of buses, while FirstGroup swayed around, into trains and out of them, into the American market and out again.

Now the future direction of all three looks uncertain. Stagecoach was lining up for a merger with National Express. The Midlands-based bus and coach operator looked like being the dominant entity in any merger, but be that as it may, on paper the two companies provided a good fit. You could see how both bus and coach operations could be strengthened while back office overheads could be cut.

But then National Express was gazumped by an outfit few, even in the transport world, had ever heard of: the German-based DWS Infrastructure. DWS is an asset management company emerging out of Deutsche Bank, which still holds 80% of the company’s shares. DWS is short for “die Wertpapier Spezialisten” or “the fund specialists”. Buses, indeed transport, appear to have featured little in their activities to date.

It seems DWS sees Stagecoach simply as a good investment, much like a pension fund would, which implies a good deal of freedom for the senior employees of the company here in the UK.

As part of the new arrangements, Brian Souter, who for many was Mr Stagecoach, has rung his last bell and issued his last ticket. Already, changes in direction are apparent, including a stronger commitment to the environment and a volte face on opposition to franchising.

Meanwhile, the even less well known US-based I Squared Capital turned up uninvited to the HQ of Aberdeen-based FirstGroup with a £1.23bn bid. This has been rejected by First as inadequate but of course there is no guarantee that the US outfit will not be back with an improved offer.

I Squared Capital is a private equity firm focusing on global infrastructure investments. The company invests in energy, utilities, transport and telecom projects in North America, Europe and select high growth economies, such as India and China.

Why I squared? Apparently, according to the internet, “the I² statistic describes the percentage of variation across studies that is due to heterogeneity rather than chance. I² = 100% x (Q-df)/Q. I² is an intuitive and simple expression of the inconsistency of studies’ results”. Hope that’s clear.

Stagecoach and FirstGroup between them control 47% of the bus market, while First is also the country’s largest train operator (unless you want to argue that the Department for Transport holds that position).

Then there’s Go-Ahead. The successful global outfit had only recently changed its CEO with the retirement of David Brown, and embarked on a new direction under Christian Schreyer. Now, as reported in the last edition of Passenger Transport, the company has accepted a takeover bid from a consortium of transport interests from Australia, New Zealand and Spain, underwritten by a Canadian pension fund.

In this case, the stated intention is to allow Go-Ahead to continue to operate as a stand alone company within the new group. No guarantees, mind you.

I can see a positive future for public transport, but I can also see a bleak one

Of course all three bids have come in at a difficult time for public transport, indeed perhaps that is why they have come in at this point. Perhaps the bidders have been attracted by the large amount of government money that has been forthcoming over the last couple of years, money likely to dry up.

The ‘y’ in my equation relates to the uncertain future for passenger numbers, and so underlying viability, in the aftermath of Covid. The problem is particularly acute on rail.

It was interesting to read the views of transport professionals in the last edition of Passenger Transport, views which were calmly realistic, and actually, overall, optimistic.

In particular I noted the strong wish for the government to mount a vigorous campaign to get people back on buses and trains. This has been a central push for the Campaign for Better Transport where I contribute part-time as their director of external affairs.

We have also picked up, as did the survey, that some passengers, particularly the elderly, have not returned due to ill-founded fears about the safety in health terms of public transport. This results from the government’s own exhortations at the start of the pandemic to avoid buses and trains, an impression that has stuck with some and that can only be unstuck by the government.

The government has been helpfully proactive through the Great British Rail Sale (I managed to get a return ticket from Lewes to London for £3.50, a far cry from the £66 I was charged for a Travelcard for the same journey last week), but has as yet done nothing for buses in terms of promotion.

Recently CBT held its annual parliamentary reception at which the guest speaker was buses minister Charlotte Vere. Her response to the call from the charity’s CEO Paul Tuohy for a government-led campaign to get people back on buses was that this was a matter for the industry. It was not a well-received comment.

Yet the Treasury’s emergency support for buses runs out in the autumn at which point we could be facing further sweeping cuts to services, given that passenger numbers remain stubbornly below pre-Covid levels.

The situation on rail is, if anything, even more uncertain, with strikes damaging the return of passengers, and the likelihood that commuter traffic will never recover to pre-Covid levels. People have discovered working from home and like it, not least the extra money this leaves in their pocket.

There is no guarantee that any replacement for Shapps would be as effective

The ‘z’ in my equation relates to the policy directions adopted by the government.

In the present, Grant Shapps is right to press for changes to outdated and inefficient practices on rail which, frankly, should have been abolished 50 years ago, and the unions are right to press for a decent pay increase for their members. If the first can be realised, then so can the second. The sooner we get to that deal, the better all round.

The transport secretary may not be universally popular, but the reality is he is one of the more competent ministers in the government and does actually seem to care about transport. Much of what has come out of his department during his watch has been welcome.

The rumours, however, are that he wants a move and his assured media performances defending what has often been indefensible for the government suggests promotion in any reshuffle that occurs.

There is no guarantee that any replacement for Shapps would be as effective, as interested in public transport, or as committed to net zero. Don’t have nightmares, but supposed we ended up with another useless minister like Chris Grayling, or heaven forbid someone like Nadine Dorries.

Meanwhile the occupant of No. 10, whose grip on power seems to weaken by the day, is plumbing ever new depths of unpopularity, contempt even. But here’s the unpalatable truth: whatever the prime minister’s faults, and they are many, varied and deep, the fact remains that he has been unusually supportive of public transport, and any replacement is likely to be much less so.

The front-runner to be his replacement is probably still the chancellor, Rishi Sunak, who has a deep anathema towards rail which he regards as financially out of control and an unwelcome drag on the public finances. As for buses, they barely register on his radar. His transport priority, as far as this can be discerned, is cutting fuel duty for motorists.

Johnson is something of a survivor against the odds, but the sands must surely be running out for him soon. The two by-election losses will have shaken Tory MPs, especially the loss of rock-solid Tiverton and Honiton to the Lib Dems, the biggest ever majority in history to be overturned at any by-election.

The resignation of Oliver Dowden, popular in Tory ranks and someone with no leadership ambitions of his own, is the first crack in the cabinet. The revelation that the PM wanted to spend £150,000 of taxpayers’ money on a tree house for his son Wilf will not have helped. And ominously approaching like a black cloud is the inquiry by the Privileges Committee into whether the PM deliberately misled the House, which if it is concluded he did, is a resigning matter.
Like the Passenger Transport survey, I can see a positive future for public transport, but I can also see a bleak one. X + Y + Z = what?

ABOUT THE AUTHOR: Norman Baker served as transport minister from May 2010 until October 2013. He was Lib Dem MP for Lewes between 1997 and 2015.

This story appears inside the latest issue of Passenger Transport.

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