Public transport is back on the political agenda – but the financial ammunition to make bus services better remains in short supply
Transport secretary Heidi Alexander visited Greater Manchester’s Bee Network this week. Those who take back control of buses will face the same pressure to balance the books as commercial operators
Despite holding the post for less than half a year, Louise Haigh made a lively impression as secretary of state for transport. She was (is) a true believer in the social, economic and environmental value of public transport – and she also held her own around the cabinet table. The King’s Speech is an important fixture in the parliamentary calendar, wherein the government of the day sets out its priorities for the coming year. The first such speech of a brand-new government, just two weeks after winning a general election, is all the more pivotal – and prestigious. Of the 39 bills in the speech back in July, four related directly to buses and trains, and another covered planning and infrastructure. Quite an achievement on Ms Haigh’s part: public transport is back on the agenda, folks.
Or, at least, the political ambition to make it better is on the agenda. The financial ammunition to make it happen is, put lightly, a rather different matter.
The budget (heralded by the prime minister’s warning that a “long and difficult path” lies ahead) didn’t contain much cause for celebration. Indeed, that notorious note (“There’s no money left”) might as well be Latinised and adopted as the new motto of His Majesty’s Treasury. Side note: as someone who was just 11 when the credit crunch foreshadowed the Great Recession of 2008, I literally cannot remember a time when money wasn’t tight in this country. If Donald Trump’s threatened trade war comes to pass, it could yet trigger the fourth or fifth ‘once-in-a-lifetime’ financial crisis of my lifetime. And I’m not even 30 yet. But I digress…
Shortly after the budget, Haigh announced a ‘billion-pound boost’ for buses across England. Reaching for an old leaflet-worthy adage, she promised that it would “deliver London-style bus services to every corner of the country”. It’s a noble goal, to be sure. And, as outlined at the beginning, I do think the UK Government truly believes in the virtue of that promise. However, the reality of recent years is that even London doesn’t have a “London-style” system anymore: 22 million miles have been cleaved from the network in the last seven years; 1,400 buses have been stripped from the fleet; and Transport for London’s budget was the subject of a brutal tug-of-war between City Hall and Whitehall amid the economic rubble of the pandemic.
If London is the model, let it also be the cautionary tale: even if regions that re-regulate do see an uptick in patronage and revenue at first, it shouldn’t be expected to last forever
Greater Manchester last year became the first place in the UK to take the leap on re-regulation and has enjoyed early signs of success. There are, though, lingering questions about the long-term financial sustainability of the new franchising regime, particularly as public authorities face the same pressure to balance the books as struggling commercial operators – whether through genuine growth, fare hikes, service cuts or increased subsidy (or, likely, a heady combination of all four). If London is the model, let it also be the cautionary tale: even if regions that re-regulate do see an uptick in patronage and revenue at first, it shouldn’t be expected to last forever. Reality will bite and the question of who pays (and how and when) will rear its head soon enough.
This is not to single out or cast doubt on franchising. Case in point: if the operator-knows-best orthodoxy held up, we (the industry, the state, and passenger advocates) wouldn’t even be talking about structural reform. But, by definition, franchising is about stepping in to fill gaps that the free market either can’t fill or won’t fill. Cross-subsidy and the absence of shareholders will make that job easier, yes, but only to a point. There is merit in solutions that vary from place to place: where enhanced partnership between operators and authorities succeeds in one area alongside franchising or municipal ownership in another. All options should be on the table, and whatever is decided should suit local circumstances. The bottom line, however, is that any solution must stand on a sound financial footing or else it will be doomed to fail; getting off the ground is no good if you come crashing right back down again.
A huge positive is that this funding isn’t subject to competitive bidding: it’s been allocated according to need
A huge positive is that this funding isn’t subject to competitive bidding: it’s been allocated according to need (defined primarily by levels of deprivation). That means the money can be distributed – and start getting spent – more quickly. The Buses Bill also proposes to beef up the powers of local authorities – both to enforce the terms of partnerships and to “dramatically speed up” the introduction of franchising, with lessons having been learned from the Manchester experiment. It should be noted that the £135m price tag of franchising in Manchester equates to around £45 a head. Whereas in this round of funding, for example, the East Midlands (the second-biggest winner) will get just £18 a head. Quite different means to – apparently – the same ends.
The other big bus-related feature in the budget was the English fare cap. Predictably, it has provoked a political backlash, but let’s be pragmatic here: even with a 50% hike, a ticket capped at £3 is still significantly cheaper than the ‘true’ cost of a longer-distance journey. And it’s a cap, not a base: many fares will be restored to a level below £3 (limited to increasing by inflation). So, beware the temptation to act like this is some egregious hammer-blow from the blue. Public memory shouldn’t be so short that we forget what the landscape looked like before January 1, 2023. I write that as a resident of Scotland who isn’t under 22 or over 60 and can’t help but think: “cap, what cap?”
So, the price point isn’t the problem. Not necessarily, anyway. The main pitfall is that the government’s desire to “end the postcode lottery” is scuppered by the creation of a new one. In certain city regions (i.e. Greater Manchester, South Yorkshire and Liverpool), mayors have pledged keep the cap at £2. In most of England, smaller cities and counties which lack the same powers to raise and spend revenue will see it rise to £3. London, of course, remains cheapest of all at £1.75. And in Scotland, Wales and Northern Ireland, there is no cap at all (and there never was one). It may not be a literal lottery, but it certainly matters where you buy your ticket.
Another cause for concern is the as-yet unanswered question of what happens beyond December 31, 2025. Will bus services and the passengers who use them be given a smooth, gentle off-ramp – or will they be driven off a cliff-edge? In an interview on Sky News, Haigh hinted that the cap will be allowed to expire, with a view to replacing it with “targeted” interventions aimed at young people and those living in rural areas. An off-ramp for some; a cliff-edge for others. A birth certificate raffle to accompany that postcode lottery.
If the state wants to play a bigger role in the delivery of local bus services, it needs a full toolkit – the resources, the funding and the stability – to do so
But this is a government that came into office on the back of (fairly) criticising what it called “short-term sticking plaster politics”. Prior to the general election, the Confederation of Passenger Transport published Driving Britain Forward – a wishlist of priorities to safeguard bus services throughout the lifetime of this new parliament. At the top of that list was a five-year funding settlement. Giving authorities and operators money to spend next year is to be welcomed, for sure, but what about the four years after that? Or, dare I say, the years that lie even further beyond? The CPT points out that “a lack of clarity over the existence and size of future funding streams” prevents operators and authorities alike from investing in much-needed, longer-term improvements. This isn’t just a matter of free market confidence: if the state wants to play a bigger role in the delivery of local bus services, it needs a full toolkit – the resources, the funding and the stability – to do so.
Finally, there’s the question of devolution and divergence. There’s no guarantee that the billions of pounds of Barnett consequentials from this budget at Westminster will be spent on transport at Holyrood or Cardiff. As a Scot, I am concerned that the £500m Bus Partnership Fund – previously “paused” – has now been ditched altogether, and we don’t yet know how much its successor, the new “Bus Infrastructure Fund”, will be worth. (It will almost certainly be less.) And there’s a whole other article to be written on the long-term sustainability of free travel for under-22s. The TLDR version would be: how long until reimbursement rates are cut, or the budget is hard-capped? That fear isn’t without warrant: it’s already the case with concessions for over-60s and disabled people, and it’s proven to be an enormous challenge for the industry. And then there’s the matter of new powers in the Transport (Scotland) Act 2019 for franchising and council ownership – but no new money for enacting them. At least (even if it’s not enough or not eternal) England is getting some cash to splash.
Money may not make the world go round, but it does make the wheels on the bus go round. As the old saying goes: we get what we pay for.
ABOUT THE AUTHOR: Marc Winsland is senior consultant – bus operations at SYSTRA. He was previously commercial manager at bus operator Xplore Dundee.
This story appears inside the latest issue of Passenger Transport.
Budgeting for Britain’s buses
by Passenger Transport on Jan 10, 2025 • 12:50 pm No CommentsPublic transport is back on the political agenda – but the financial ammunition to make bus services better remains in short supply
Despite holding the post for less than half a year, Louise Haigh made a lively impression as secretary of state for transport. She was (is) a true believer in the social, economic and environmental value of public transport – and she also held her own around the cabinet table. The King’s Speech is an important fixture in the parliamentary calendar, wherein the government of the day sets out its priorities for the coming year. The first such speech of a brand-new government, just two weeks after winning a general election, is all the more pivotal – and prestigious. Of the 39 bills in the speech back in July, four related directly to buses and trains, and another covered planning and infrastructure. Quite an achievement on Ms Haigh’s part: public transport is back on the agenda, folks.
Or, at least, the political ambition to make it better is on the agenda. The financial ammunition to make it happen is, put lightly, a rather different matter.
The budget (heralded by the prime minister’s warning that a “long and difficult path” lies ahead) didn’t contain much cause for celebration. Indeed, that notorious note (“There’s no money left”) might as well be Latinised and adopted as the new motto of His Majesty’s Treasury. Side note: as someone who was just 11 when the credit crunch foreshadowed the Great Recession of 2008, I literally cannot remember a time when money wasn’t tight in this country. If Donald Trump’s threatened trade war comes to pass, it could yet trigger the fourth or fifth ‘once-in-a-lifetime’ financial crisis of my lifetime. And I’m not even 30 yet. But I digress…
Shortly after the budget, Haigh announced a ‘billion-pound boost’ for buses across England. Reaching for an old leaflet-worthy adage, she promised that it would “deliver London-style bus services to every corner of the country”. It’s a noble goal, to be sure. And, as outlined at the beginning, I do think the UK Government truly believes in the virtue of that promise. However, the reality of recent years is that even London doesn’t have a “London-style” system anymore: 22 million miles have been cleaved from the network in the last seven years; 1,400 buses have been stripped from the fleet; and Transport for London’s budget was the subject of a brutal tug-of-war between City Hall and Whitehall amid the economic rubble of the pandemic.
Greater Manchester last year became the first place in the UK to take the leap on re-regulation and has enjoyed early signs of success. There are, though, lingering questions about the long-term financial sustainability of the new franchising regime, particularly as public authorities face the same pressure to balance the books as struggling commercial operators – whether through genuine growth, fare hikes, service cuts or increased subsidy (or, likely, a heady combination of all four). If London is the model, let it also be the cautionary tale: even if regions that re-regulate do see an uptick in patronage and revenue at first, it shouldn’t be expected to last forever. Reality will bite and the question of who pays (and how and when) will rear its head soon enough.
This is not to single out or cast doubt on franchising. Case in point: if the operator-knows-best orthodoxy held up, we (the industry, the state, and passenger advocates) wouldn’t even be talking about structural reform. But, by definition, franchising is about stepping in to fill gaps that the free market either can’t fill or won’t fill. Cross-subsidy and the absence of shareholders will make that job easier, yes, but only to a point. There is merit in solutions that vary from place to place: where enhanced partnership between operators and authorities succeeds in one area alongside franchising or municipal ownership in another. All options should be on the table, and whatever is decided should suit local circumstances. The bottom line, however, is that any solution must stand on a sound financial footing or else it will be doomed to fail; getting off the ground is no good if you come crashing right back down again.
A huge positive is that this funding isn’t subject to competitive bidding: it’s been allocated according to need (defined primarily by levels of deprivation). That means the money can be distributed – and start getting spent – more quickly. The Buses Bill also proposes to beef up the powers of local authorities – both to enforce the terms of partnerships and to “dramatically speed up” the introduction of franchising, with lessons having been learned from the Manchester experiment. It should be noted that the £135m price tag of franchising in Manchester equates to around £45 a head. Whereas in this round of funding, for example, the East Midlands (the second-biggest winner) will get just £18 a head. Quite different means to – apparently – the same ends.
The other big bus-related feature in the budget was the English fare cap. Predictably, it has provoked a political backlash, but let’s be pragmatic here: even with a 50% hike, a ticket capped at £3 is still significantly cheaper than the ‘true’ cost of a longer-distance journey. And it’s a cap, not a base: many fares will be restored to a level below £3 (limited to increasing by inflation). So, beware the temptation to act like this is some egregious hammer-blow from the blue. Public memory shouldn’t be so short that we forget what the landscape looked like before January 1, 2023. I write that as a resident of Scotland who isn’t under 22 or over 60 and can’t help but think: “cap, what cap?”
So, the price point isn’t the problem. Not necessarily, anyway. The main pitfall is that the government’s desire to “end the postcode lottery” is scuppered by the creation of a new one. In certain city regions (i.e. Greater Manchester, South Yorkshire and Liverpool), mayors have pledged keep the cap at £2. In most of England, smaller cities and counties which lack the same powers to raise and spend revenue will see it rise to £3. London, of course, remains cheapest of all at £1.75. And in Scotland, Wales and Northern Ireland, there is no cap at all (and there never was one). It may not be a literal lottery, but it certainly matters where you buy your ticket.
Another cause for concern is the as-yet unanswered question of what happens beyond December 31, 2025. Will bus services and the passengers who use them be given a smooth, gentle off-ramp – or will they be driven off a cliff-edge? In an interview on Sky News, Haigh hinted that the cap will be allowed to expire, with a view to replacing it with “targeted” interventions aimed at young people and those living in rural areas. An off-ramp for some; a cliff-edge for others. A birth certificate raffle to accompany that postcode lottery.
But this is a government that came into office on the back of (fairly) criticising what it called “short-term sticking plaster politics”. Prior to the general election, the Confederation of Passenger Transport published Driving Britain Forward – a wishlist of priorities to safeguard bus services throughout the lifetime of this new parliament. At the top of that list was a five-year funding settlement. Giving authorities and operators money to spend next year is to be welcomed, for sure, but what about the four years after that? Or, dare I say, the years that lie even further beyond? The CPT points out that “a lack of clarity over the existence and size of future funding streams” prevents operators and authorities alike from investing in much-needed, longer-term improvements. This isn’t just a matter of free market confidence: if the state wants to play a bigger role in the delivery of local bus services, it needs a full toolkit – the resources, the funding and the stability – to do so.
Finally, there’s the question of devolution and divergence. There’s no guarantee that the billions of pounds of Barnett consequentials from this budget at Westminster will be spent on transport at Holyrood or Cardiff. As a Scot, I am concerned that the £500m Bus Partnership Fund – previously “paused” – has now been ditched altogether, and we don’t yet know how much its successor, the new “Bus Infrastructure Fund”, will be worth. (It will almost certainly be less.) And there’s a whole other article to be written on the long-term sustainability of free travel for under-22s. The TLDR version would be: how long until reimbursement rates are cut, or the budget is hard-capped? That fear isn’t without warrant: it’s already the case with concessions for over-60s and disabled people, and it’s proven to be an enormous challenge for the industry. And then there’s the matter of new powers in the Transport (Scotland) Act 2019 for franchising and council ownership – but no new money for enacting them. At least (even if it’s not enough or not eternal) England is getting some cash to splash.
Money may not make the world go round, but it does make the wheels on the bus go round. As the old saying goes: we get what we pay for.
ABOUT THE AUTHOR: Marc Winsland is senior consultant – bus operations at SYSTRA. He was previously commercial manager at bus operator Xplore Dundee.
This story appears inside the latest issue of Passenger Transport.
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